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Lecture 12: Ch. 17–18 | Int'l Marketing-MKTG 335-G | Chad Jardine, Utah Valley University, 2015–2017

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Lecture 12: Ch. 17–18 | Int'l Marketing-MKTG 335-G | Chad Jardine, Utah Valley University, 2015–2017

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Chapter 17–18: Sales and Pricing

This presentation is part of a series of lectures by Chad Jardine, teaching MKTG 335-G, International Marketing at Utah Valley University, 2015–2017.

International marketing is a fascinating topic and I hope publishing my lectures will inform and educate. It's important to note that this is NOT an online course. The video contains lecture content only and is presented without the course context where assignments, exams, and a schedule of other coursework would be included. Enjoy!

Chapter 17–18: Sales and Pricing

This presentation is part of a series of lectures by Chad Jardine, teaching MKTG 335-G, International Marketing at Utah Valley University, 2015–2017.

International marketing is a fascinating topic and I hope publishing my lectures will inform and educate. It's important to note that this is NOT an online course. The video contains lecture content only and is presented without the course context where assignments, exams, and a schedule of other coursework would be included. Enjoy!

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Lecture 12: Ch. 17–18 | Int'l Marketing-MKTG 335-G | Chad Jardine, Utah Valley University, 2015–2017

  1. 1. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. International Marketing MKTG 335-G
  2. 2. McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Personal Selling and Sales Management Chapter 17
  3. 3. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Takeaways: Chapter 17 What You Need to Know: • Characteristics of international sales teams. • Compensation issues • What makes a good international salesperson
  4. 4. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Marketing and Sales Personnel Expatriates: Relocate a salesperson from the home country. Virtual Expatriates: Telecommuting salesperson from the home country. Local National: Hire a salesperson from the target country Third-Country National: Hire a salesperson from another country with related experience.
  5. 5. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Information-oriented cultures like Germany may be more appropriate for using expatriates. Designing the Salesforce
  6. 6. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Relationship-oriented cultures like Japan require the in- depth local knowledge of natives. Designing the Salesforce
  7. 7. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Marketing and Sales Personnel Expatriates • Difficult to uproot families for a two- or three- year assignment • increasing numbers of dual career couples often require finding suitable jobs for spouses • many executives believe such assignments impede their subsequent promotions at home
  8. 8. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Marketing and Sales Personnel Local Nationals • Historically, companies prefer expatriates, but this is changing in favor of local nationals. • Local nationals typically cost less. • Headquarters tends to discount the advice of local nationals. • Influence is restricted by limited language skills and understanding of home office politics. • Distance creates real barriers to communication and participation in strategy.
  9. 9. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Host country restrictions may impact who and from where you can hire salespeople. Marketing and Sales Personnel
  10. 10. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Concerns about foreign corporate domination, local unemployment, and other issues cause some countries to restrict the number of non-nationals allowed to work Marketing and Sales Personnel
  11. 11. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Most countries have specific immigration rules, including the U.S., controlling the number of foreigners allowed to work or train within their borders Marketing and Sales Personnel
  12. 12. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. In the past, personnel gained foreign-country experience by being sent to lower management positions to get the training before assuming top-level foreign assignments Marketing and Sales Personnel
  13. 13. 1-‹#› 
 Selecting Sales and Marketing Personnel
 ▪ In addition to descriptions for each marketing position, a transnational management position can require special skills and attitudes: • Maturity is a prime requisite for expatriate and third-country personnel • International personnel require a kind of emotional stability not demanded in domestic sales positions • Managers or salespeople operating in foreign countries need considerable breadth of knowledge of many subjects both on and off the job. The ability to speak one or more other languages is always preferable • The marketer who expects to be effective in the international marketplace needs to have a positive outlook on an international assignment • An international salesperson must have a high level of flexibility, whether working in a foreign country or at home • Cultural empathy is clearly a part of the basic orientation, because anyone who is antagonistic or confused about the environment is unlikely to be effective • Finally, international sales and marketing personnel must be energetic and enjoy travel
  14. 14. 1-‹#› 
 Developing Cultural Awareness
 ▪ People with cultural skills can: • Communicate respect and convey verbally and nonverbally a positive regard and sincere interest in people and their culture. • Tolerate ambiguity and cope with cultural differences and the frustration that frequently develops when things are different and circumstances change. • Display empathy by understanding other people’s needs and differences from their point of view • Remain nonjudgmental about the behavior of others, particularly with reference to their own value standards. • Recognize and control the SRC, that is, recognize their own culture and values as an influence on their perceptions, evaluations, and judgment in a situation. • Laugh things off—a good sense of humor helps when frustration levels rise and things do not work as planned.
  15. 15. 1-‹#› Designing Compensation Systems: For a Global Salesforce ▪ Among multinational companies about half describe their sales compensation plans as global in nature and the other half as local ▪ Compensation plans of American companies vary substantially around the globe, reflecting the economic, legal, and cultural differences
  16. 16. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. International Marketing MKTG 335-G
  17. 17. McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Pricing for International Markets Chapter 18
  18. 18. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Quote of the Week “The moment you make a mistake in pricing, you’re eating into your reputation or your profits.” —Katie Paine CMO, News Group
  19. 19. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Takeaways: Chapter 18 What You Need to Know: • Components of pricing as competitive tools in international marketing • How to control pricing in parallel import or gray markets • Price escalation and how to minimize its effect • Counter trading and its place in international marketing practices • The mechanics of price quotations • The mechanics of getting paid
  20. 20. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. International Pricing Setting and changing prices are key strategic marketing decisions
  21. 21. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. International Pricing Prices both set values and communicate in international markets, they must reflect the quality and value the consumer perceives in the product
  22. 22. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. International Pricing The country in which business is being conducted, the type of product, variations in competitive conditions, and other strategic factors affect pricing activity
  23. 23. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Pricing Policy In setting a price in international markets, different tariffs, costs, attitudes, competition, currency fluctuations, and methods of price quotation need to be taken into account
  24. 24. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Pricing Policy Active marketing in several countries compounds the variables relating to price policy
  25. 25. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Pricing Objectives The more control a company has over the final price of a product, the better it is able to achieve its marketing goals, but it is not always possible to control end prices
  26. 26. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Pricing Objectives Broader product lines and more countries involved make the process of controlling prices charged to the end user the more complex.
  27. 27. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Parallel Importation or Gray Markets The possibility of a parallel market occurs whenever price differences are greater than the cost of transportation between two markets
  28. 28. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Parallel Importation or Gray Markets For example, the ulcer drug Losec sells for only $18 in Spain but goes for $39 in Germany; and the heart drug Plavix costs $55 in France and sells for $79 in London.
  29. 29. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Parallel Importation or Gray Markets An intermediary can buy products where they are less expensive and sell it in countries where the price is higher and make a profit.
  30. 30. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Parallel Importation or Gray Markets Exclusive distribution, designed to maintain high retail margins encourage retailers to stock large assortments, or to maintain the exclusive-quality image of a product, can create a favorable condition for parallel importing
  31. 31. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Pricing Unit Economics Understanding fixed, variable and full costs
  32. 32. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Pricing Unit Economics Full-Cost Pricing: Each unit of a similar product sold must bear its full share of the total fixed and variable cost.
  33. 33. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Pricing Unit Economics Variable-Cost Pricing: firms regard foreign sales as bonus sales. They ignore fixed costs and view any return over their variable cost as a contribution to net profit
  34. 34. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Pricing Unit Economics Price Sensitivity (or Elasticity of demand): is how sensitive buyers are to price. For example, buyers are typically less sensitive to price when purchasing luxury goods.
  35. 35. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Pricing Unit Economics Pricing strategy typically falls on a spectrum from skimming on one hand to penetration pricing on the other.
  36. 36. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Pricing Unit Economics Skimming is used to reach a segment of the market that is relatively price insensitive and thus willing to pay a premium price for a product.
  37. 37. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Pricing Unit Economics Penetration strategy is used to stimulate market growth and capture market share by deliberately offering products at low prices.
  38. 38. Price Escalation Price escalation refers to the added costs incurred as a result of exporting products from one country to another 38
  39. 39. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Dumping WTO rules allow for the imposition of a duty when goods are dumped.
  40. 40. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Dumping A countervailing duty or minimum access volume (MAV), restricting the amount a country will import, may be imposed on foreign goods benefiting from subsidies.
  41. 41. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Dumping One approach classifies international shipments as dumped if the products are sold below their cost of production.
  42. 42. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Dumping The other approach characterizes dumping as selling goods in a foreign market below the price of the same goods in the home market.
  43. 43. 1-‹#› Leasing as a Pricing Tool ▪ Leasing opens the door to a large segment of nominally financed foreign firms that can be sold on a lease option but might be unable to buy for cash ▪ Leasing can ease the problems of selling new, experimental equipment, because less risk is involved for the users ▪ Leasing helps guarantee better maintenance and service on overseas equipment ▪ Equipment leased and in use helps sell other companies in that country ▪ Lease revenue tends to be more stable over a period of time than direct sales would be
  44. 44. Countertrade as a Pricing Tool Countertrade is a pricing tool that every international marketer must be ready to employ 44
  45. 45. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Diamond Cartel A cartel exists when companies producing similar products work together to control markets for the types of goods they produce
  46. 46. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. Takeaways: Chapter 18 What You Need to Know: • Components of pricing as competitive tools in international marketing • How to control pricing in parallel import or gray markets • Price escalation and how to minimize its effect • Counter trading and its place in international marketing practices • The mechanics of price quotations • The mechanics of getting paid
  47. 47. International Marketing: MKTG 335-G Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners. International Marketing MKTG 335-G

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