International marketing


Published on

Published in: Business
1 Like
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

International marketing

  1. 1. BY MANISHA 1
  2. 2.  Review of marketing research techniques  Specific problems in international 2
  3. 3.  General principles of marketing research  Qualitative research  Quantitative 3
  4. 4. Marketing research is the link between the marketer and the market… It is the starting point of marketing… Marketing research is the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company. MIS: consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision 4
  5. 5. Capture Create value for customers and value from build customer relationships customers in return Understand Design a Construct a Build profitable Capture the customer- marketing relationships value from marketplace driven program that and create customers toand customer marketing delivers customer create profits needs and strategy superior satisfaction and wants value customer quality Marketing Global Ethics and technology vaghela_manisha13@yaho markets social responsibility 5
  7. 7.  UNDERSTAND  DESCRIBE  EXPLAIN  MEASURE  FORECAST  VERIFY Product, consumer, distributor, competitor, environmental 7
  8. 8. Define problem and Develop the research research objectives plan Analyze the Collect the information information Present the 8
  9. 9.  The research design formally describes the characteristics of the survey and the procedures used to conduct the study.  It is the methodological framework of the research.  Contents:  Goals  Information sources  Variables Internal validity  Survey method  Sampling method External validity  Data analysis  Calendar  9
  10. 10. -Documentary EXPLORATORY -Qualitative -Documentary DESCRIPTIVE -Quantitative -Experimentation CAUSAL 10
  11. 11.  Observational research - Audit: inventories, facing, pantry check… - Mechanical: scanning, EDI, eye camera… Experimental research - Product/concept tests: prototype, comparative or not - Market/store tests: laboratory stores, catalog sales, mobile stores, in-store tests, city tests… Ad hoc research - Qualitative research: interviews, focus groups… - Quantitative research: surveys, opinion polls… 11
  12. 12.  The distinction between qualitative and quantitative research depends on the nature of the research problem.  If “why?” or “how?” QUALITATIVE RESEARCH  If “how many?” or “how much?” QUANTITATIVE 12
  13. 13.  Secondary sources: Existing data. All forms of documentary research. DESK RESEARCH  Primary sources: Data collected for a specific situation at company’s request. FIELD RESEARCH, AD HOC  These sources can be internal or external.  The choice will depend on the marketing problem, objectives, resources… 13
  14. 14.  First step to marketing research  4 steps  Define the topic (clear, feasible, pertinent)  Identify key words associated to the topic  Search for available sources of information  Consult, sort and summarize information  Questions to ask  Does the data correspond to the situation?  Is there a risk of obtaining biased information?  Was the research design technically coherent?  Are the findings clear, precise…?vaghela_manisha13@yaho 14
  15. 15.  These institutes collect information for resale.  They can give 2 types of information:  Standardized periodic information: panels, longitudinal studies. Firms subscribe to this information. This is a secondary information source.  On-order studies: reserved solely for one company or omnibus studies. This is a primary information 15
  16. 16. Secondary PrimaryAdvantages Low in cost Adapted information Diversity Recent, up-to-date Available Not available to Problem definition competitors Familiar with marketDisadvantages Incomplete, outdated Costly Inadequate Difficult to collect False information Time consuming Difficult to control vaghela_manisha13@yaho 16
  17. 17. SECONDARY SOURCES (Desk Research) Internal External PRIMARY SOURCES (Field Research) Qualitative 17
  18. 18. 18
  19. 19.  Collecting and analyzing psycho- sociological elements which explain facts, attitudes, opinions, motivations and behaviors of all people involved in a given marketing situation  Qualitative research methods are used for in-depth exploratory studies of the decision- making process and psychological mechanisms that affect individual or group 19
  20. 20.  Qualitative research studies lead to understanding the causes or the basis for behaviors, attitudes and opinions.  They are often based on analyzing how a product or company is perceived by individuals or consumers.  However, results cannot be extrapolated. They cannot be considered as being representative of the entire population. Sample size = 10 - 20
  21. 21.  Defining the marketing problem is difficult (explore market)  Finding causes, decision-making criteria of consumer behavior  Secondary information is insufficient  Constructing questionnaire for a survey  Explaining surprising results of quantitative research  Promoting 21
  22. 22. Advantages Disadvantages -Quick and flexible -Non-representative (maximum 70 people) sample -Less costly -Research design is -Allows exploration difficult to plan -Attitudes, motivations, -Quality of the study opinions are studied depends on researcher -Reveals deep feelings skills and 22
  23. 23.  Two ways of classifying qualitative studies:  Degree of induction (level of consciousness)  Unstructured interview (pure exploration)  Centered or focus interview (exploration and in-depth analysis)  Structured interview (identification and verification)  Number of people being interviewed  Individual  23
  24. 24. Levels of consciousness OPINIONS Structured interview ATTITUDES Centered or Focus interview MOTIVATIONS / Unstructured BELIEFS interview or centered withvaghela_manisha13@yaho projective 24
  25. 25.  Conducted in a face-to-face situation  Large, ambiguous opening  Funnel approach  The respondent is free to express his feelings as wishes and for as long as he wishes  Non-directive, but reformulation techniques  Use in 25
  26. 26. Present research Large opening objectives statement or questions Reformulation Researcher adopts techniques (« mirror a non-directive effect ») attitude Respondent goes further in-depth « auto-exploration » 26
  27. 27.  Same general structure and basic principles as the unstructured interview  However, an interview guide is used  This guide is composed of topics or questions to be addressed during the interview  The interviewer will bring up topic if and only if respondent does not spontaneously address issues  This is NOT a questionnaire (no order, modifications possible, different versions allowed)  This is the most popular form of qualitative 27
  28. 28.  Used to avoid psychological obstacles (taboos, reluctance, courtesy bias, subconscious…) or to go further in-depth  Visual or written stimuli  The respondent will overcome hesitations  Difficult to analyze, ambiguous  Different tests  Word association  Sentence completion  Story completion  Frustration or cartoon test  TAT (Thematic Apperception Test)  Haire 28
  29. 29. List 1 List 2  1 lb. of carrots  1 lb. of carrots  Roast beef  Roast beef  1 can of Delmonte corn  1 can of Delmonte corn  Heinz ketchup  Heinz ketchup  Folgers ground coffee  Nescafé instant coffee  Tide laundry detergent  Tide laundry detergent  3 onions  3 onions ? ? 29
  30. 30.  Most directive method in qualitative marketing research  A questionnaire is used  However, the questionnaire is only composed of open-end questions  Questionnaire facilitates the research process as well as analysis  Confusion between qualitative and quantitative research  It is theoretically incorrect to extrapolate or generalize the 30
  31. 31.  Nearly always use the centered approach (interview guide, group discussion is directed by interviewer)  About 7 to 10 participants per group  The role of the interviewer is very important  Interviewer must manage the group in terms of participation, conflict, domination, summaries, etc …  Organization and logistical 31
  32. 32.  Three phases during the group interview:  Presentation (warming up): explanations, rules of the game, individual introductions, anonymous responses…  Exchange: each participant gives his or her opinions, thoughts, group dialogue, tests…  Summarize: verify all topics of interview guide, repeats, star technique (circept), gift… 32
  33. 33.  Unstructured : large opening statement and non-directive attitude (≈ 500 to 800 €)  Centered : interview guide to « center » discussion (≈ 250 to 500 €)  Structured : qualitative questionnaire (≈ 150 to 200 €)  Focus group : centered interview, 7 to 10 participants per group (≈ 5000 to 8000 €) 33
  34. 34. Advantages DisadvantagesIndividual -Personal, in-depth -Researcher traininginterview questions -Analyzing findings -Lower cost per respondent -Long to conduct -Only solution in some cases (B to B, competitors)Focus -More information during -No in-depthgroups discussion motivations -Quicker to conduct -Risk of conformity, -Possible to study strong group interactions and influences influence during the decision process -Organizational and vaghela_manisha13@yaho -Stimulate ideas and logistic difficulties 34
  35. 35.  No representative sample, but variety of individuals is important  No important profiles should be excluded  Sequential procedure (arborescence) is used:  List of criteria explaining differences of behavior  Rank criteria from most important to least important  List possibilities for each criteria  Build arborescence  Verify coherency of 35
  36. 36.  Same basic principles (arborescence)  All participants must feel “equal”  However, there are two important rules:  Group must be heterogeneous (cover all of the profiles of the populations)  Group must be homogeneous (for criteria that may lead to an unbalanced group) Many groups may be need to be organized in order to avoid unbalanced groups or inter-group 36
  37. 37. Two different methods can be used:  Summaries of interviews, “verbatims”  Content analysis  Requires re-transcribing of all interviews  Specialized software  Quantification, scientific rigor  Time and 37
  38. 38. 38
  39. 39.  Associated with descriptive research  Objectives are different: verify, measure, estimate...  Sampling methods are different  Large sample size (300 – 1000+)  Methods of administration change  Precision of an estimation, margin of error  Data analysis is more 39
  40. 40. Advantages Disadvantages -Delivers precise numerical -Does not explain why or estimations (forecasting, how market share, intentions…) -Precision tool, not a -Extrapolation possible discovery tool -Representative sample -Self-report data -Superior objectivity -Broad but shallow data -Statistical techniques -Long and costly -Inter-group comparisons -Difficult in B to Bvaghela_manisha13@yaho studies -Longitudinal -Participation 40 unrewarding (direct
  41. 41.  Census  Collect information from each member of the population  Complete canvass of the population  Depends on the size of the target population  Survey  Most familiar of all market research methodologies  Collect information from a portion of the population  Procedure in which a fixed set of questions is asked of a sample of respondents  On the basis of information collected on the subset, it is possible to infer something about the larger group  Inference depends on the sampling 41
  42. 42.  Census: n = N  Survey: n/N = subset of the population, survey rate or sampling rate  Exhaustive or non-exhaustive survey Generalization and extrapolation of 42
  43. 43.  Representative sample sampling method and response rate  Precision sample size and margin of error  Quality of questionnaire and administration  Researcher training and experience  Quality of information processing  Quality of data 43
  44. 44. n N 70% 70% + e Sampling is necessary every time the population size is too large to be able to collect information from all elements of the 44
  45. 45.  Probability  Each population element has a known, non-zero chance of being included in the sample  Final elements are selected objectively by a specific process  Equal probabilities are not necessary  Allow an assessment of the amount of sampling error likely to occur  Requires an exhaustive sample frame  Non-probability  No way of estimating that probability that any population element will be included in the sample  Rely on personal judgment somewhere in the process  Statistically, precision (sampling error) cannot be 45
  46. 46. PROBABILITY NON-PROBABILITY SAMPLES SAMPLES  Simple random  Quota sample sample  Random route sample  Cluster sample  Judgment sample (on-  Area sample the-spot sample)  Level random sample  Convenience sample  Stratified random 46
  47. 47.  SRS: each population element has a know and equal chance of being selected; central-limit theorem (when n is large, the sample mean will be normally distributed).  Cluster and area: first parent population is divided into mutually exclusive and exhaustive subsets, then a random sample of the subset is selected.  LRS: random sampling occurs at several different levels of the population.  Stratified: population is divided into strata subpopulations and random sampling occurs invaghela_manisha13@yaho 47
  48. 48.  Quotas: attempt to ensure that the sample is representative by selecting sample elements in such a way that the proportion of the sample elements possessing a certain characteristic is approximately the same as the proportion of the elements with the characteristic in the population.  Random route: each field worker is given a random route to follow, leading to the selection of people to interview.  Judgment: sample elements are handpicked because it is expected that they can serve the research purpose and it is believed that they are representative of the population of interest (purposive samples).  Convenience: sometimes called accidental samples because those composing the sample enter by accident (volunteers, radio shows…) 48
  49. 49. Do we have a sample Yes frame? No Do we have a Is SRS too frame of clusters? costly? Yes No Yes No Is the Is it too Are there frames Yes population costly? at different levels? stratified? No Yes No Yes No Stratified Cluster or area Level random SRS sample sample 49
  50. 50. Do we know the structure of the population for several variables that explain differences in behavior? Yes No Is the population Quota widely dispersed? sample Yes No Are there Random mandatory route passage points? Yes No Judgment or Snowball or other on-the-spot convenience sample 50
  51. 51.  With probability samples, precision and minimal sample size can be determined  Sample size must be greater than 30  Estimation, confidence level, confidence interval and margin of error  Probability sampling methods or Kish coefficient  Precision of an estimation is not proportional to sample size, but to the square root of the sample size. To double precision, the sample size must be multiplied by 51
  52. 52. 2 n=t pq Non-exhaustive 2 sample e n’ = (n x N) / (n + N) Exhaustive sample e= t √pq Margin of error for n probability samples n = budget – fixed costs Budget approach direct cost per 52
  53. 53.  Specify what information will be collected  Determine type of questionnaire and method of administration  Determine content of individual questions  Determine form of response to individual questions  Determine wording of each question  Determine sequence of questions  Determine physical characteristics of questionnaire  Reexamine and revise  Pretest questionnaire and revise if 53
  54. 54.  These two decisions are interdependent  The length of the questionnaire will influence the choice of the method of administration  Self-administered questionnaires (mail, Internet, questionnaire in magazine, etc…): response rate is generally low (< 20%)  Questionnaires completed with researcher (direct personal interviewing, phone): longer questionnaire and higher response rate (50%) 54
  55. 55.  Open-ended  Dichotomous: 2 possible answers  Multiple choice: 3 or more possible answers  Likert scale: a statement with which the respondent shows the amount of agreement or disagreement (strongly agree – strongly disagree)  Semantic differential scale: a scale connecting two bipolar words, respondent selects the point that represents his/her opinion (enthusiastic – unenthusiastic)  Importance scale: rates the importance of some attribute (extremely important – extremely unimportant)  Rating scale: rates some attribute from “poor” to “excellent”  Intention-to-buy scale: describes respondent’s intention to buy a product or service (definitely buy – definitely not buy) Avoid halo effect (change direction in scales to avoid repetition) 55
  56. 56.  The phrasing of a question can directly affect the responses.  General rules:  Use simple words  Avoid technical vocabulary in consumer research  Avoid double negations  Avoid ambiguous words and questions  Avoid leading questions  Avoid double-barreled questions  56
  57. 57. General rules:  Questionnaire should be very logical and easy to respond to.  Use simple, interesting opening question.  Use the funnel approach (start with broad questions and progressively narrow down in scope).  Avoid jumping around from topic to topic.  Use transitions.  Design branching questions with care.  Place difficult or sensitive questions late in the questionnaire.  Ask for classification information 57
  58. 58. Knowledge and awareness questions Factual behavior questions Attitude questions Intention questions Classification 58
  59. 59.  Data collection should never begin without an adequate pretest of the instrument.  Can be used to assess both individual questions and their sequence.  Small sample of 10 to 30  Questionnaire followed by interview to identify problems and misunderstandings  Pretest results are not included in the final results of the survey “The pretest is the most inexpensive insurance the marketer can buy to ensure the success of the questionnaire and the entire research project” 59
  60. 60.  Univariate analysis descriptive statistics and graphical information  Multivariate analysis cross-tabulations, Chi square tests, correlation analysis, multiple regression analysis, cluster analysis (perceptual mapping), factor analysis… 60
  61. 61.  Sample size  Accessibility  Survey length  Analysis ≈ 100 € per 61
  62. 62. 62
  63. 63.  Globalization, but change at different rates in different parts of the world  Challenge of conducting high quality research as quick as possible in multiple diverse settings  Research conducted simultaneously in developed and developing world  Unbalanced spread of marketing research expenditures  Multi-faceted issues (where, how, who, tools, comparisons…)  New technologies (CATI, CAPI, scanners, Internet…) 63
  64. 64.  Who will conduct the research? degree of research centralization  Is the information comparable? cross-cultural research equivalences  What are the sources of bias? five bias 64
  65. 65.  The firm can use internal or external research services.  The unknown competitive situation and different cultural backgrounds complicate the choice between internal and external research.  Problem: exclusive contracts with marketing research firms…  To what degree should international marketing research be centralized?  Three choices: internal marketing department, domestic research firm, foreign research 65
  66. 66. Access to Information Quality and Adaptation Monitoring Cost information sources reliability of to firm’s information problemInternal Low access. Limited Risk in Excellent. Excellent. Low in Network knowledge terms of Traveldepartment problem. of sources in analysis. expenses Competitive foreign Language and use of analysis market. problems. staff. difficult. Cultural bias.Domestic Good if the Excellent in Risk in Very good. Good. Easy High in cost.research firm has an France. terms of Easy to to monitor Specificfirm important Perhaps analysis. clarify if during the project fees. local limited in Language problems. research network. foreign problems. process. market. Depends on the informal network.Foreign Very good. Excellent in Excellent. Limited. The Limited. Variable.research Low risk of foreign firm may be Risk of non-firm ignoring market, but unknown. conformity essential only local. with initialvaghela_manisha13@yaho information. 66
  67. 67.  This question is very important in cross-cultural or comparative studies.  Some words, ideas, concepts, practices, etc… will have different meanings in different cultural contexts.  Research equivalence is necessary, but not always easy to achieve.  Equivalences must be verified before conducting research on “foreign” consumer 67
  68. 68.  Functional equivalence: do products serve the same function?  Conceptual equivalence: do relevant concepts have the same meaning and/or importance?  Category equivalence: does the product belong to the same category or domain?  Translation equivalence: cross-check, translation-retranslation  Metric equivalence: scaling, odd/even, do adjectives have the same strength and distances?  Respondent equivalence: who should answer questions? same social role? sampling unit…  Sampling frame equivalence: how will sample be chosen? 68
  69. 69.  Bias = distorted results, incorrect or false compared to reality…  Biased responses are more likely to occur in international marketing research than in domestic research and are harder to avoid  Importance of control, pre-test, acculturation…  Research plans must be adapted to reduce the risk of biased 69
  70. 70.  Courtesy bias: concerns the social desirability of answers, the respondent hopes to please the interviewer  Subject bias: concerns the way a society perceives an issue as being more or less sensitive  Cultural-trait bias: a given cultural trait can alter the findings (IDV, MAS…)  Response style bias: some responses are more or less extreme in some cultures (scaling, ranking), coefficients  Non-response bias: non-response style varies according to country, gender, race… 70
  71. 71.  Qualitative research only accounts for less than 20% of research expenditures around the world (emerging markets, innovation, brand renewal…), but this is increasing  Length of interview and compensation will vary from one market to the other (monochronic and low-context = shorter interviews and larger compensation)  Some techniques are unknown or unfeasible (projective techniques, on-line surveys, CAGI/CATI…)  Focus groups are very culture-bound (collectivistic vs. individualistic societies, social status, disagreement…)  Sampling techniques are limited (reliable information is not widely available, statistics, sampling base…)  Collecting information is difficult (level of economic development, illiteracy, local authorizations…)  Cross-cultural research is limited (comparison is difficult, concepts/rituals…)  Recent developments in international marketing 71
  72. 72. 72
  73. 73. Capture value Create value for customers and build customer relationships from customersUnderstand the Construct a Capture value Design a Build profitable from marketplace customer-driven marketing relationships and and customer program that customers to marketing create customer create profits needs and strategy delivers satisfaction wants superior value and customer quality Product and Select customers service design: CRM and CEM: Research build strong Createconsumers and to serve: build strong satisfied loyal segmentation and brands relationships with market customers targeting chosen Pricing: create customers real value Capture Manage customer marketing Decide on a value Partner proposition: Distribution: lifetime valueinformation and manage demand relationship customer data differentiation and management: positioning and supply Increase share chains build strong of market and relationships with share of Promotion: marketing customer communicate VP partners Marketing technology vaghela_manisha13@yaho Global markets Ethical and social responsibility 73
  74. 74. Strategic SBU SBU SBU segmentationStrategic positioning Core marketMarket segmentation S1 S2 S3 Market targeting Target segment Consumer preferences Competitor positioning Firm advantagesMarket positioning Positioning -Sales objectives -Budgets vaghela_manisha13@yaho Marketing mix -4 Ps 74
  75. 75.  What is it?  Identifying and profiling distinct groups of buyers who might require separate products and/or marketing mixes  Clustering consumers in terms of behavior, needs, attitudes, opinions…  Why?  Buyers/consumers differ in many ways  They do not respond to the same stimuli in the same way  So, different offers for different types of buyers  Market segmentation represents an effort to increase a company’s targeting 75
  76. 76.  Mass marketing  Mass production, distribution and promotion of one product for all buyers  Largest potential market, “one size fits all”  Lowest costs = lower prices or higher margins Segment marketing  Large identifiable group within a market  Buyers differ in their wants, purchasing power, location, attitudes and habits…but the company is not willing to customize its offer to each individual customer  More appropriate products and services, distribution and communication easier, fewer competitors Niche marketing  More narrowly defined group, a small market whose needs are not being well served  Smaller companies can become more competitive through specialization  Better understanding of customers who willingly pay a price premium Individual marketing  Segments of one, customized marketing, one-to-one marketing…  More frequent in B to B than in B to C  New technologies allow “mass customization” ; ability to prepare on a mass basis individually designed products and communications to meet each customer’s 76
  77. 77. Market segments and niches can be identified by applying successive variables to subdivide a market. 3 steps:  Research stage: gain insight into consumer motivations, attitudes and behavior and collect important data (attributes and ratings, brand awareness and rating, product-usage patterns, attitudes toward product category, customer characteristics…).  Analysis stage: factor analysis to remove highly correlated variables and cluster analysis to create a specific number of maximally different segments.  Profiling stage: each cluster is profiled in terms of its distinguishing attitudes, behavior, customer characteristics… Market segmentation must be redone periodically because market segments change over time, especially in international 77
  78. 78. Consumer characteristics Marketing characteristicsGeographic -Consumer responses to benefits-Nations sought, use occasions or brands-States (consumer-response segments)-Regions-Cities… -Hierarchy of attributes in choosing a brand, shifts in consumer prioritiesDemographic (market partitioning)-Age and life-cycle stage- VALS or psychographics -Marketing mix variables: product, price, placement, promotion-Gender (price-quality-type dominant)-Income-Generation-Social class… In international marketing, broader market segments compared to vaghela_manisha13@yaho domestic segments, transnational segments 78
  79. 79. Size PDI UAI IDV MAS Marketing implications (million)Cluster 1 203 Small Medium Medium- High Preference for “highAustria, High performance” products,Germany, use “successful-achiever”Switzerland, them in advertising, desireItaly, GB, for novelty, variety andIreland pleasure, fairly risk-averse market.Cluster 2 182 Medium Strong Varied Low- Appeal to consumer’sBelgium, Medium status and power position,France, reduce perceived risk inGreece, product purchase and use,Portugal, emphasize productSpain, functionality.TurkeyCluster 3 37 Small Low High Low Relatively weak resistanceDenmark, to new products, strongSweden, consumer desire forNetherlands novelty and variety, high, Norway consumer regard for vaghela_manisha13@yaho “environmentally friendly” 79 marketers and socially
  80. 80.  « Marketization »:  Countries’ exposure to global communications, increased product availability and variety, and overall attempt to close the living standards gap with developed countries  Reflects a set of institutional values and cultural requirements for the operation of effective private markets (materialistic values as a stimulus for greater production, competition, freedom of information…)  « Westernization »:  Countries’ proximity to the West  The duration and the extent of their openness to Western influence and 80
  81. 81. High Marketization Cluster 1Low Cluster 3 HighWesternization Westernizatio n Cluster 4 Cluster 2 Clusters are likely to have Low Marketization common characteristics and share similar consumer needs and vaghela_manisha13@yaho purchasing behaviorSource: Lascu, Manrai and Manrai 81
  82. 82.  Cluster 1: High-marketization and high-westernization (Hungary, Poland, Czech and Slovak Republics, Slovenia)  Geographic: Central Europe, border developed countries, more urbanized  Cultural: Slavic languages (except Hungary), primarily Catholic religion  Economic: more developed Cluster 2: Low-marketization and high-westernization (Bosnia, Serbia, Croatia, Montenegro, Macedonia)  Geographic: Central Europe, more urbanized  Cultural: Slavic languages, primarily Eastern Orthodox and Muslim  Economic: more developed, but less than cluster 82
  83. 83.  Cluster 3: High-marketization and low-westernization (Bulgaria and Romania)  Geographic: Balkan peninsula, urbanized to a lesser extent than cluster 2  Cultural: Latin and Slavic languages, Eastern Orthodox religion  Economic: slower in the development process  Cluster 4: Low-marketization and low-westernization (Albania and Western countries of the former Soviet Union)  Geographic: Less urbanized than cluster 3  Cultural: Slavic languages (Russian is the primary commercial language), Eastern Orthodox and Muslim  Economic: formerly “fierce” dictatorships, slower 83
  84. 84. After identifying different markets and market segments, the firm must:  Evaluate the various segments  Decide how many and which ones to 84
  85. 85.  Overall attractiveness of the segment  Size, growth, profitability, scale economies, low risk…  How easy is it to persuade buyers to shift their purchases (consumers, relative non-consumers, absolute non-consumers)?  Brand loyalty vs. dissatisfied buyers  Company’s objectives and resources  Do segments correspond to the company’s long- term objectives?  Does company possess the skills and resources needed to succeed in the segment?  The company should only enter market segments in which it can offer superior 85
  86. 86. 5 different target market strategies:  Single-segment concentration  Concentrated marketing  Strong knowledge of segment’s needs  Strong market position in segment  Economies through specialization = high returns  Risks are higher than normal  Selective specialization  Several segments that are objectively attractive  Little or no synergy among segments but each is  Diversification of firm’s riskvaghela_manisha13@yaho 86
  87. 87.  Product specialization  Concentrate on certain product to several segments  Strong reputation in specific product area  Risk of technology Market specialization  Concentrate on serving many needs of a particular customer group  Strong reputation with group, channel for all new products  Risk of decreased buying power in the group Full market coverage  Serve all customer groups with all products they need  Limited to very large firms  Undifferentiated: ignore segment differences, one offer for entire Differentiated: operate in several segments with different programs 87
  88. 88.  Market positioning: act of designing the company’s offering and image so that they occupy a meaningful and distinctive competitive position in the target customer’s mind; refers to the consumer’s perception of a product or brand amongst other brands  Objective: attaining a prominent place for company’s brand amongst other brands in the minds of consumers  Positioning mainly results from marketing communication regarding brands, social communication and personal experience  Categorization and positioning within category Product differentiation, international 88
  89. 89. Market Product segmentation differentiation Demand side Supply sideHeterogeneous markets Homogeneous products are divided into can be differentiated into homogeneous products tuned to these submarkets homogeneous market segments(market segmentation) (market positioning) 89
  90. 90. Product Services Personnel Channel ImageFeatures Ordering Competence Coverage ValuePerformance ease Courtesy Expertise propositionConformance Delivery Credibility Performanc EmotionalPrice Installation Reliability e powerQuality Customer Responsivene SymbolsDurability training ss MediaReliability Customer Communicatio Atmosphere consulting n EventsRepairability MaintenanceStyle WarrantyDesign vaghela_manisha13@yaho o.comDifferent attributes in different markets, cultural influence90
  91. 91.  How many difference should a firm promote? USP: “best quality”, “best service”, “lowest price”, “best value”, “safest”, “fastest”, “most convenient”, “most advanced technology”… Double-benefit positioning: if two or more firms are claiming to be best on the same attribute, search for special niche within the target segment, two benefits must be compatible (“safest” and “most durable”) The number of differences should be limited (communication, clarity, credibility) Coherency in international markets is essential, between markets and between segments vaghela_manisha13@yaho 91
  92. 92.  Once positioning strategy chosen, the firm must communicate the positioning effectively  Mentally distinguish offerings, enter into the minds of consumers  Communication through physical signs and cues Marketing mix is used to communicate the company’s 92
  93. 93.  Marketing strategy must be implemented through marketing programs  Managers must decide on marketing expenditures, marketing mix, and resource allocation  Internal cultural diversity  External cultural diversity  Marketing mix allows firm to communicate and implement its strategy, formalized in marketing 93
  94. 94.  Marketing mix is the set of marketing tools that the firm uses to pursue its marketing objectives in the target market.  4 Ps (McCarthy):  Product 4 Cs (Lauterborn)  Price -Customer needs and wants  Promotion -Cost to the customer  Place -Communication 94
  95. 95. Product Product variety, quality, design, features, brand name, packaging, sizes, services, warranties, returns… Price List price, discounts, payment period, credit terms… Promotion Sales promotion, advertising, sales force, public relations, direct marketing… Place Channels (direct, indirect, exclusive, selective, intensive), coverage, assortments, locations, inventory,vaghela_manisha13@yaho logistics, transport… 95
  96. 96.  Debate in marketing since Buzzell (1968) and Levitt (1983)  Factors encouraging standardization  Economies of scale in production  Economies in R&D  Economies in marketing  Global competition  “Shrinking” of world market Degree of  “Converging, homogeneous cultures” standardization, Degree of  Factors encouraging adaptation adaptation, glob  Differing use conditions al/local paradox  Government and regulatory influences  Local competition  Differing consumer behavior  “True” to marketing conceptvaghela_manisha13@yaho 96
  97. 97. HighDegree of culturalgrounding Low Industrial/Technology intensive Consumer Nature of product vaghela_manisha13@yaho 97 Source: Czinkota and Ronkainen
  98. 98.  Consumption patterns  Psychosocial characteristics  Cultural 98
  99. 99.  Pattern of purchase  Is the product purchased by relatively the same consumer income group from one country to the other?  Do the same family members motivate the purchase or dictate brand choice in all target countries?  Do most consumers expect a product to have the same appearance?  Is the purchase rate the same regardless of the country?  Are most purchases made at the same kind of retail outlet?  Do most consumers spend the same amount of time making the purchase?  Pattern of usage  Do most consumers use the product for the same purpose?  Is the product used in different amounts from one area to another?  Is the method of preparation the same in all target markets?  Is the product used along with other products? 99
  100. 100.  Attitudes toward the product  Are the basic psychological, social, and economic factors motivating the purchase and use of the product the same for all target markets?  Are the advantages/disadvantages of the product in the minds of consumers basically the same from one country to another?  Does the symbolic content of the product differ from one country to another?  Is the psychic cost of purchasing and using the product the same?  Attitudes toward the brand  Is the brand name equally known and accepted in all target countries?  Are customer attitudes toward the package basically the same?  Are customer attitudes toward pricing basically the same?  Is brand loyalty the same throughout target countries for the product? 100
  101. 101.  Does society restrict the purchase and/or use of the product to a particular group?  Is there a stigma attached to a product?  Does the usage of the product interfere with tradition in one or more of the targeted markets?  Does the message of the product correspond to core cultural values?  How do the different dimensions of culture influence the purchase and use of the product? 101
  102. 102.  “A product is anything that can be offered to a market to satisfy a want or need” (Kotler)  Physical goods  Services  Persons  Places  Organizations  Ideas Common product problems:  Developing new products Product  Managing life-cycle strategies policy,  Managing product lines product  Managing brands… 102
  103. 103.  Product lines  Width: how many product lines the firm carries  Length: how many items in each product line  Depth: how many variants are offered of each product in the line  Consistency: how closely related the various product lines are (end use, production, distribution channels, etc…) Branding  Identifies the company at six different levels: attributes, benefits, values, culture, personality and user  Brand awareness, brand acceptability, brand preference, brand loyalty  Global branding and international Degree of adaptation in FMCG 103
  104. 104. Augmented product Installation Tangible product Packaging Core product Brand Features name Core After- Delivery benefit sale and credit or service service Quality Styling Global Warranty variations, adapt orvaghela_manisha13@yaho standardize? 104
  105. 105.  Country of origin, made in effect  Preference for national brands  Global branding (mono, line, umbrella)  Brand equity and extension  International standards  Product protection vaghela_manisha13@yaho Product 105
  106. 106.  Existence of global product? International standard?  Three common strategies  Straight extension  Product invention  Product adaptation  Technical adaptation  Commercial adaptation  Consumer products vs. industrial 106
  107. 107. Select pricing Determine Estimate objective demand costs Select pricing Analyze competitors’ method costs, prices, and offers Select final 107
  108. 108.  Mark-up pricing: add a standard mark-up to the product’s cost  Target-return pricing: determine price that would yield its target rate of return (ROI)  Perceived-value pricing: buyers’ perception of value, not the seller’s cost, is the key to pricing  Value pricing: low price for fairly high-quality (EDLP)  Going-rate pricing: prices are largely based on competitors’ prices, rather than on costs or demand  Sealed-bid pricing: competitive-based pricing based on expectations of how competitors will price  Yield pricing: discriminatory pricing depending on customer segment and inventory 108
  109. 109.  International price escalation problem  Four types of strategies  Uniform price everywhere: different profit rates, too high in some countries  Market-based price: ignores costs, parallel importations  Cost-based price: standard markup everywhere, too high in some countries  Identical pricing position: compare to local competition in each market  Transfer prices and dumping  Gray-market problem, copies… 109
  110. 110.  Identify target audience: research, image analysis…  Determine communication objectives: awareness, knowledge, liking, preference, conviction, purch ase…  Design message: content, appeals, structure, format, source…  Select communication channels: personal, non-personal  Promotion budget: weight of promotion in marketing mix…  Promotion mix: allocation between advertising, sales promotion, public relations, sales force and direct marketing…  Measure results: research…vaghela_manisha13@yaho 110
  111. 111. Advertising Sales Public Sales force Direct promotion Relations marketingPrint and Contests Press kits Sales Catalogsbroadcast Sampling Speeches presentations Websitesads Gifts Annual reports Sales meetings MailingsPackaging Fairs and trade Sponsorships Incentive TelemarketingMotion shows Publications programs On-line salespictures Demonstration Samples Community TV shoppingBrochures s relations Fairs and tradeDirectories Coupons Lobbying showsBillboards Rebates CompanyP-P displays Entertainment magazineSymbols and Loyalty Special eventslogos programs Tie-ins vaghela_manisha13@yaho 111
  112. 112. Three different levels of communication:  Corporate communication: inform firm’s partners (shareholders, administrations, suppliers, press, etc…)  Institutional communication: communicate the firm’s values to the public and inside the organization  Brand or product communication: image, consumer’s desires, technical characteristics, performance, etc… Corporate and institutional communication are easily standardized, but brand/ communication is harder to standardize 112
  113. 113.  Advertising is a form of communication  A product’s position or difference is transmitted to target segment through communication  Communication styles vary from country to country, they are culture-bound  The role and importance of advertising/media also vary from one country to another  Cultural factors affecting communication:  High-context vs. low-context  Explicit vs. implicit  Direct vs. indirect  Informational vs. 113
  114. 114.  Power distance  High: status symbols, presence and importance of elders, master-learner relationships…  Low: independence, “empowered” consumers Individualism/Collectivism  IDV: low context, direct, explicit (you, we, I…), data, facts  COL: high context, indirect, symbols, entertainment, groups Masculinity/Femininity  MAS: winning, success, domination, persuasion, comparative advertising, reverse sexism…  FEM: less endorsement, caring, less role differentiation Uncertainty avoidance  High: explanations, testing, technology, design, structure, well-groomed  Low: results are important, change, subtle LTO/STOvaghela_manisha13@yahourgency, direct style  STO: sense LTO: build trust, nature, entertainment  114
  115. 115.  Sales-response model  Simple stimulus-response model  Very direct, “buy now” strategy, short term effect  Low PDI, IDV, MAS, Low UAI (Anglo-Saxon model)  Persuasion model  Short term shift in attitude, buying intention, and brand preference through providing arguments  “Lecture” form (presenters, demonstrations, testimonials), persuasive and direct  US, UK, Germany, Switzerland, Austria…  Involvement model  Build relationships between consumers and brands by creating emotional closeness  Brand becomes a “personality”, indirect  FEM, IDV (Netherlands, Scandinavia, France…)vaghela_manisha13@yaho 115
  116. 116.  Awareness model  Create awareness to differentiate brands from similar brands  Associations, metaphors, humor, build trust, indirect  Low IDV (Spain, Asia, Latin America...)  Emotions model  Create positive attitude and brand loyalty  Builds connections between brands and emotions, emotion often linked with product category  Low IDV, low MAS (Spain, Latin America, Africa)  Likability model  Liking the advertisement will lead to liking the brand  Indirect, entertaining/story, make friends to build trust and dependence  Japan, China  Symbolism model  Turn the brand into a symbol/code, cohesion to subculture  Very culture specific (symbols of status, success, self- expression, stability…)  High PDI, High UAI, Low-Mid IDV (Asia, France, south of Europe) 116
  117. 117.  What is a marketing channel (or distribution channel)? “Marketing channels are sets of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user” (Kotler)  What about international marketing channels? These interdependent organizations allow goods and services to cross national SCM, BtoC and BtoB, IMMvaghela_manisha13@yaho 117
  118. 118. Channels Channels between within Final Seller foreign buyers countries countries 1. Channels between countries: gets the products to the borders of the foreign market; decisions concerning types of intermediaries (agents, trading companies, etc…), types of transport, financing and risk management… 2. Channels within foreign countries: gets the products from entry point to final buyers and users; decisions concerning types of retailers (franchising, supermarkets, etc…), local channels Channels of distribution vary considerably among countries. Distribution, by its nature, is a marketing activity that isvaghela_manisha13@yahoo.comperformed close to the market. 118
  119. 119.  Channel design: types of intermediaries, number of intermediaries (exclusive, selective, intensive), contractual arrangements…  Managing retailing, wholesaling and market logistics…  Selecting, motivating and evaluating channel members (cooperation, conflict, competition)  Channel dynamics: traditional, VMS, HMS, multi- channel marketing systems…  Most difficult part of the mix to 119
  120. 120.  Considered by many as the most important aspect of a firm’s internationalization strategy  Entry mode will determine long-term success or withdrawal from foreign markets  Poor decisions can be very costly for the 120
  121. 121. Target country Target country Target country Home country market factors environmental production factors factors factors External factors Entry mode Internal factors decision Company product Company resource factors and commitment 121
  122. 122. Entry operationChoice of target Setting objectives Choice of Design the Targetproduct/market and goals entry mode marketing plan market Control systems: monitoring operations / Revising entry strategy vaghela_manisha13@yaho 122
  123. 123.  Exporting (commercial strategy, commercial modes) Foreign direct investment (industrial strategy, integrated modes) Associated or contractual modes (contractual strategy, competitive alliances) 123
  124. 124. Exporting Contractual modes FDI - + Commitment, risk, control, profit 124
  125. 125.  Indirect exporting  Distributor / export merchants  Export agent  EMC  Direct exporting  Export department  Export sales representatives  E-business  Cooperative exporting  Export groups  Piggyback 125
  126. 126.  The ultimate form of foreign involvement  Direct ownership of foreign-based assembly, manufacturing or sales facilities  The company can buy part or full interest in a local company (M&A) or build its own facilities (GFI, ex nihilo)  Considered the “preferred” mode of 126
  127. 127. Advantages - Cost economies (labor, raw materials, incentives, freight savings, etc…) - Better image in host country - Deeper relationship with government, customers, local suppliers, distributors - Better adaptation - Full control of investments - Long term objectives Disadvantages - High initial and operating costsvaghela_manisha13@yaho risk - High level 127
  128. 128.  Make-or-buy decision  Greenfield investment / Ex nihilo  Mergers and acquisition  Branch or subsidiary?  Structure  Legal status  Analyzing FDI project  Assessing profitability  Discounted cash flow 128
  129. 129.  Newest, most recent forms of international business  Transfer of technology or know-how between two firms  Shared risks  Only option in countries where the government requires foreign firms to use local capital  Better access to local market 129
  130. 130.  Joint venture: foreign and local investors share ownership and control of local operations  Licensing: licensor licenses a foreign company to use a manufacturing process, trademark, patent, trade secret or other item of value for a fee  Management contracts: firm exports management services instead of a product, separation between ownership and management  International Franchising: contractual association between a franchisor (manufacturer, wholesaler or service organization) and franchisees (independent business people who buy the right to own and operate units in the franchise system). Franchising is based on some unique product, service or method of doing business.  Industrial franchising  Distribution franchising B.F.F.  Service 130
  131. 131.  Direct modes  Direct franchising (16%)  Subsidiary (19%)  Area development agreements (14%)  Indirect modes  Joint venture (16%)  Master franchising (34%) 131
  132. 132. International franchising comparative matrix Strong MasterDistance /  franchising Direct franchisingAdaptation  Joint venture  FDI Area  Direct  development franchising agreement Weak Commitment / Weak vaghela_manisha13@yaho Strong Control 132
  133. 133. Hierarchical model of entry mode choice International franchisingEnvironmental Organizational factors Level of commitment factors Equity Non-equityEnvironmental Direct or indirect mode Organizational factors factors Joint Direct franchising Master FDI vaghela_manisha13@yaho venture or ADA franchising 133
  134. 134. Environmental factors Organizational factorsLevel 1 Economic risk Financial and human resources(commitment) Market size Management attitudes and Political risk orientation Competitive situation Recruiting and training Level of economic franchisees development Price-bonding ratioLevel 2 Financial situation of partners Brand image(direct/indirect Brand protection Experience) Local regulations Need for control Cultural differences Type of product/service Tax System Degree of standardization Geographic distance Brand recognition Franchisor’s national culture Dispersion of units vaghela_manisha13@yaho 134
  135. 135.  Entry modes vary in terms of resource or equity commitment to foreign markets  Low-commitment modes can allow firm to reduce risk in high-risk countries, culturally diverse countries or limited potential markets  Desired degree of control over international operations influences choice of entry mode  Loss of control yields limited returns  No market entry strategy is appropriate in all circumstances  Most firms will have a vast portfolio of entry modes, depending on each specific market situation  Comparative approach to entry mode choice (commitment, control, risk, adaptation, contribution of how…)vaghela_manisha13@yaho 135
  136. 136. High Franchising FDI Licensing Wholly owned subsidiary (M&A) Management contract Branch officeContribution AD / Concessionaireof know-how Agent EMC Minority shareholding Piggy back through partial acquisition ITC / distributor Majority JV investment Foreign buying (local partner know-how) Low department Low vaghela_manisha13@yaho Level of ownership High 136
  137. 137. All entry modes Internal factors Rejected entry modes External factors All feasible entry modes Comparative profit Comparative Comparative analysis for contribution analysis risk analysis nonprofit objectives Ranking by overall comparative assessment Target The right entry mode Marketing channels within markets 137
  138. 138.  What is a marketing channel or channel of distribution?  “an organized network of agencies and institutions which, in combination, perform all the activities required to link producers with users to accomplish the marketing task” (AMA)  They perform functions that add utility to a product or service:  Place utility: availability of a product or service in a location that is convenient to a potential customer  Time utility: availability when desired by a customer  Form utility: availability of the product processed, prepared, in proper condition and/or ready to use  Information utility: availability of answers to questions and general communication about useful product features and 138
  139. 139.  Business-to-consumer channels  Designed to put products in the hands of people for their own use  Alternatives: direct marketing, franchising, sales force, agents/brokers, internal sales force, wholesalers, retailers…  Business-to-business channels  Deliver products to manufacturers that use them as inputs in the production process or in day-to- day operations  Alternatives: internal sales force, distributors, wholesalers… 139
  140. 140. M M M M M M MSF Agents, MSF MSF brokers Internet, mail Company- order, door-to- owned, W Wdoor, house party, franchising etc… R R R R vaghela_manisha13@yaho Consumers 140
  141. 141.  Global retailing  Case of hypermarkets  Multi-channel strategies  Case of franchising-Internet  Market-specific channels  Case of wine 141
  142. 142.  Global retailing since 1970s, but many variations…  Differences in the importance and types of retailing channels: shopping malls, department stores, discount stores, wholesale clubs, category killers, outlet centers, hypermarkets…  Factors affecting the success of hypermarkets: culture, income, market fragmentation, traditional stores, locations, demography…  Global retailing market entry Wal-mart 142
  143. 143. Culturally close Organic growth Chain acquisitionEasy to Difficult enter to enter Franchising Joint-venture Culturally distant vaghela_manisha13@yaho 143
  144. 144. BRICK AND CLICK AND MORTAR MORTAR Coexistence of traditional and virtual marketing channels “brick and click” Antagonostic complementary? 144
  145. 145.  Brand structure rather than channel structure (reduce risk of network competition)  Sell all products on-line  Ensure multi-channel coherency  Back-office motivation  Use Internet to increase visits (locations, maps)  Limit use of e-mail…  … But does this apply to franchising? 145
  146. 146.  Franchising firms are « plural form networks » Internet is another distribution channel Internet seems to be a priority Internet is « revolutionizing » franchising… But, franchisors offering on-line sales are limited  32% in the US  30% in the UK  Less than 20% in 146
  147. 147. Opportunities ThreatsNew marketing channel CannibalismIncreased sales Restriction franchiseeNetwork image salesPositive internal effects Non-conformity websites Exclusive territories Definition catchment areavaghela_manisha13@yaho Limits some entry 147