www.GetPedia.com*More than 150,000 articles in thesearch database*Learn how almost everythingworks
1Master of Business AdministrationInternational MarketingPaper 488914Part 3Local MarketingWeekly ProgrammeObjective Topics...
2The beer marketCan Beer be aninternational, globalproduct?Johanson, Page 225The beer marketCorona• Became most popular im...
3Local MicrosegmentationSegmentation Criteria• Economic- the most basic local segmentation criterion is stilleconomic deve...
4Local Marketing in Mature MarketsLocal marketing in• mature markets• new growth markets• emerging marketsMature markets• ...
5ValueStatusAffordablePricingadaptedAdvancedBasicProduct designwideLimitedLowProduct rangeCompete for shareParticipation i...
6Ultra-Heat-Treated MilkUltra-Heat-Treated Milk requires no refrigerationUS• Large refrigerators, therefore buy milk by ga...
7Marketing Mix in Mature MarketsProduct Policies• Many Third World countries tend toward selling a low-cost “me-too” produ...
8Pan-European MarketingCompetition• The integration forced large European corporations to startcoordinating previously ind...
9Regional Trade Agreements• The 1994 NAFTA agreement has created increasedexchange between- Canada- the U.S.- MexicoBackgr...
10Marketing-Mix in North AmericaProduct Policies• Market size, affluence, and diversity have meant that theNorth American ...
11Local Marketing in Growth MarketsLocal marketing in• mature markets• new growth markets• emerging marketsNew growth mark...
12Marketing-Mix in Growth MarketsMarketing Tactics• Product- Basic localization to make sure the product functions well is...
13Population in New Asian Growth Markets(year 2000, in millions)1260100321112747 22282820200400600800100012001400ChinaIndi...
14Marketing in the New Asian Growth MarketsMarket Environment• Several of these countries are ethnically homogeneous while...
15Local Marketing in Emerging MarketsLocal marketing in• mature market• new growth markets• emerging marketsEmerging marke...
16Marketing-Mix in Emerging MarketsProduct Positioning• product policy a key issue• Customer needs tend to be basic and do...
17Entry Barriers in ChinaImport License Controls• The Ministry of Foreign Trade and EconomicCooperation (MOFTEC)Protective...
18Westernization of Chinese ConsumersChristmas shopping isbecoming more important thanSpring festivalDepartment stores use...
19Cultural DifferencesPresent yourself Highlight yourself Be part of a groupSelf confident Enjoy respectBe dynamic and pus...
20China … land of extremesChina … land of extremes
21The automotive boom will bringproblemsPeople living in metropolitan areas= 480 Mill (=EU + USA)Only 1% of city residents...
22Key figures of the Chinese car marketAround 100 automotive manufacturers• Most produce less than 100.000 units pa40 to 5...
23Impact of World Trade OrganisationOpens the market and increases competitionClassical Management functions become more i...
24Challenges of co-operativeinternationalisation strategies in ChinaMarketLack of efficient legal frameworkClosed market• ...
25Case 3.2 Levi Strauss Japan K.K.Selling Jeans in JapanDISCUSSION QUESTIONS:1. What are the key success factors (KSFs) in...
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Mba international marketing local marketing

  1. 1. www.GetPedia.com*More than 150,000 articles in thesearch database*Learn how almost everythingworks
  2. 2. 1Master of Business AdministrationInternational MarketingPaper 488914Part 3Local MarketingWeekly ProgrammeObjective Topics ReadingsWEEK 1: Introduction: Fundamentals of International MarketingWEEK 2: Market Entry OptionsWEEK 3: Local MarketingDiscuss how to create andimplement local marketingactivitiesSegmentationMature MarketsNew Growth MarketsEmerging MarketsText: Chapter 7-10Case 3.2: Levi Strauss JapanKKWEEK 4: Global Marketing (I) Brand and Product StrategiesWEEK 5: Global Marketing (II) Price, Distribution and Advertising StrategiesWEEK 6: Salesforce Management and Marketing Organisation
  3. 3. 2The beer marketCan Beer be aninternational, globalproduct?Johanson, Page 225The beer marketCorona• Became most popular imported beer in the US in 1999• Mexicans regard Corona as a relatively low-class beer• Targets two niche markets- Mexicans living in the US- Young American beer drinkers, many of whom vacationed on Mexicanbeaches• Export all over the worldHeineken• Available in 170 countries• Most international beer in the worldGermany• Over 3.500 beer brandsJohanson, Page 225
  4. 4. 3Local MicrosegmentationSegmentation Criteria• Economic- the most basic local segmentation criterion is stilleconomic development• Demographic- the age and family structure in different countriesplay an important role in determining globalsegments• Culture- people care about their identify even though a lothas been said in the media about the emergence ofglobal segments of people• Benefits- the most clearcut segmentation criteria are thosewhich focus on the benefits sought• Lifestyle- consumers start developing their own lifestyle withbuying behavior involving more than simplenecessitiesSegmentation and PositioningLocal market segmentPositioningUniversalthe sameacross countriesUniformThe sameaccross countriesAdaptedDiffers fromcountry to countryVolvoPampersLevi´sHondaNikeYoung boys andaspiring athleticsIkeaMobile phonesUniqueDiffers fromcountry to country
  5. 5. 4Local Marketing in Mature MarketsLocal marketing in• mature markets• new growth markets• emerging marketsMature markets• Show slow growth apart from some high-technology markets. Thecustomers in these mature markets are pampered by strong domesticand global companies who compete intensely for customer satisfactionNew growth markets• Show greater purchasing power and more demanding consumers thanemerging markets. Possess a rapidly developing marketinginfrastructureEmerging markets• Characterized by low levels of product penetration, weakly establishedmarketing infrastructure, relatively unsophisticated consumers with weakpurchasing power, and weak domestic competitorsThree Local Marketing Environments
  6. 6. 5ValueStatusAffordablePricingadaptedAdvancedBasicProduct designwideLimitedLowProduct rangeCompete for shareParticipation ingrowthMarket developmentStrategic focusIn store promotionStrongWeakDistributionLowMediumHighPolitical riskSaturatedStrongEmbryonicConsumer marketsStrongStrongWeakForeign competitionStrongGetting strongerWeakDomestic competitionLowMediumHighBarriersMatureNew growthEmergingThree Local Marketing EnvironmentsLocal Marketing in Mature MarketsLocal marketing in• mature markets• new growth markets• emerging marketsMature markets• Show slow growth apart fromsome high-technology markets.The customers in these maturemarkets are pampered by strongdomestic and global companieswho compete intensely forcustomer satisfaction
  7. 7. 6Ultra-Heat-Treated MilkUltra-Heat-Treated Milk requires no refrigerationUS• Large refrigerators, therefore buy milk by gallon or half-gallon• Prefere cold and fresh milk (= healthy)• Assume technologically sophisticated food must be artificial• Not well acceptedEU• Little room in their refrigerators and pantries prefere small cartons• More acceptedMature MarketsCompetition• In many mature markets intense competition has produced amanagement focus on customer satisfaction• There exists a need to make sure that existing customers will stay loyalTwo factors make customers satisfied in mature markets- Product quality including functional performance factors• Emotional factors or a matter of pleasing the customerSegmentation• customers are increasingly particular with well-developed preferences• The fragmentation of mature markets presents an opportunity that therewill often be a part of the market that has yet to find the kind of productdesired
  8. 8. 7Marketing Mix in Mature MarketsProduct Policies• Many Third World countries tend toward selling a low-cost “me-too” product in a mature market- A “me-too” product is basically a copy of another product, often with simpler features and at a lower price• The global marketer introducing a new kind of product to a local market has the advantage of littleor no competitionPricing• In mature markets it is common to think of pricing in terms of selecting a target position and thenusing temporary deals and offers to attract customers in the short termDistribution• In mature markets, the distribution system is usually well developed• One distribution strategy is “piggybacking”- An existing network controlled by another company, often a potential competitor, in which the product isdistributed through contracting with the competitor to move products on a fee or commission basisPromotion• In many mature markets where market share is the criterion of success s- Sales promotions are used to break the habitual choice of the loyal customerPan-European MarketingEurope becoming a verylarge single marketApproaching 400 millionconsumersSingle currency (EURO €)15 members• Belgium, Germany, France,Italy, Luxembourg,Netherlands. Denmark,Ireland, United Kingdom,Greece, Spain, Portugal,Austria, Finland, SwedenNew members in May 2004• Cyprus, the Czech Republic,Estonia, Hungary, Latvia,Lithuania, Malta, Poland, theSlovak Republic, andSlovenia• Negotiation process- Bulgaria, Romania , Turkey.
  9. 9. 8Pan-European MarketingCompetition• The integration forced large European corporations to startcoordinating previously independent national operations• For smaller European companies and even the many large firms,the threat from these foreign entrants has been met by thecreations of larger and stronger companies• At the corporate level, there seems to be only one strategicresponse possible for European firms: Get bigger and go pan-EuropeanProduct Positioning• There are very few products today that can maintain differentimages in different countries of Europe• In pan-European marketing, product positioning is the same acrosscountriesPan-European Marketing-MixProduct Policies• The marketing mixes of the European marketers have moved toward uniformity as thepan-European strategies are implemented• Most packaged goods in Europe feature packaging in at least four languages: English,French, German, and SpanishPricing• Pan-European pricing is a particularly complicated issue• As the single euro currency is introduced and companies have to set a common europrice throughout the region• Price differentials on the same product and brand in different countries are beingminimized to avoid inducing customers to buy in a neighboring countryDistribution• Retail and wholesale distribution is gradually being transformed from locally basedsmaller units to large integrated organizations resembling those common in NorthAmericaPromotion• There is increasing use of pan-European TV advertising, taking advantage of thesatellites beamed across previously closed borders
  10. 10. 9Regional Trade Agreements• The 1994 NAFTA agreement has created increasedexchange between- Canada- the U.S.- MexicoBackground• Ethnic Diversity- A fundamental cultural factor is the region’sethnic diversity• Religion- In North America, church and state areseparated by law• Decentralization- In North American, firms are spread all over theworld and even into small townsMarketing in North AmericaMarketing in North AmericaCompetition• The U.S. is one of the most competitive markets inthe worldMarket Segmentation• For segmentation purposes cultural identity canserve as a useful criterionProduct Positioning• When positioning in the U.S., premium is placed ondirect and straightforward explanations• The Canadian approach treats differences incultural norms with more sensitivity and more softsell
  11. 11. 10Marketing-Mix in North AmericaProduct Policies• Market size, affluence, and diversity have meant that theNorth American market offers a dizzying array of choicesof product and servicesPricing• The attractiveness of the North American market hasmade it a very competitive arena for many domestic andforeign producersDistribution• The great size of the North American continent and thewide spread of its people seems to be the main cause fora very efficient distribution system in the U.S.Promotion• North American communications media are similar tomedia elsewhere, but the use of advertising andcommercials is greater in North AmericaIncreased Credit Use in the USASource: www. Economy.com• More and more consumers are fueling their affluent lifestyles with credit that iseasily available, and accepted, as a normal way of life in the United States.
  12. 12. 11Local Marketing in Growth MarketsLocal marketing in• mature markets• new growth markets• emerging marketsNew growth markets• Show greater purchasing powerand more demanding consumersthan emerging markets. Possessa rapidly developing marketinginfrastructureGrowth MarketsTwo Kinds of Markets• Markets that are relatively rich in natural raw materials• Markets that have turned toward Western-style capitalism more recently, with thehelp of foreign direct investmentThe Role of Trade Blocs• Membership in trade blocs plays a very important role for two reasons- It makes the country more attractive to foreign investors- It creates an trading region with an enlarged market potentialMarket Segmentation• New growth markets are in the growth phase of the PLC• Market segmentation in these countries differs from that in the developingcountries primarily in the degree to which a core middle class is developedProduct Positioning• In new growth markets it is easy to observe the attention given to well-knownbrand names
  13. 13. 12Marketing-Mix in Growth MarketsMarketing Tactics• Product- Basic localization to make sure the product functions well is necessary in thesemarkets, and customers can be as demanding as elsewhere• Pricing- Pricing is important but can largely reflect the same considerations as in theadvanced markets—demand, costs, competitive conditions• Distribution- Distribution is very important and warrants larger margins and more supportservices than elsewhere• Promotion- Promotional support, tie-ins with local representatives, and an open mind inregard to trusting locals will be more justified in the futureMegatrends in AsiaFrom Government driven to market-driven economiesFrom villages to supercitiesFrom agricultural society to information ageFrom labor-intensive to high-technology instustriesFrom west to east, as Asia becomes the center of theworldSource: John Naisbitt, Megatrends Asia, 1995)
  14. 14. 13Population in New Asian Growth Markets(year 2000, in millions)1260100321112747 22282820200400600800100012001400ChinaIndiaIndonesiaJapanSouthKoreaTaiwanUSAGermanyGDP in New Asian Growth Markets(year 2000, US$bill)11004741534800457 310987019000200040006000800010000ChinaIndiaIndonesiaJapanSouthKoreaTaiwanUSAGermany
  15. 15. 14Marketing in the New Asian Growth MarketsMarket Environment• Several of these countries are ethnically homogeneous while others are populated byseveral racial groupsRegional Trade Agreements• The Association of South East Asian Nations (ASEAN) was created in 1967• APEC (Asia-Pacific Economic Cooperation) is a large association that spans both sidesof the Pacific• In 1992, ASEAN countries met to formalize a far-reaching trade agreement forming theASEAN Free Trade Area (AFTA)Market Segmentation• The economic upswing in the Asian high-growth markets has led to the emergence of asignificant middle class in Thailand known as the “have somes”• However justified from an economic perspective, avoiding the rural areas where peopletend to be less well off can create some political problemsProduct Positioning• The Asian markets’ desire for global identification has made many multinationals withmore mundane products use global standardization in their positioning strategiesMarketing-Mix in theNew Asian Growth MarketsProduct• Policies: The emphasis on these markets as followers of global mature marketsmakes standardized product policies natural• Design: The Asian consumer is generally more eager to achieve “a harmoniouswhole” than Western individuals• New Products: The buyers in Asian markets are basically eager to get access tothe products they see available in mature foreign marketsPricing• In Asia as elsewhere, the global marketer faces a choice between a highskimming price strategy and a lower penetration price strategyDistribution• Many observers agree that the most visible sign of economic growth in the Asianmarkets is the dynamism of the urban retail sectorPromotion• By and large the promotional strategies employed by multinationals in Asianmarkets have been only minimally adapted from elsewhere
  16. 16. 15Local Marketing in Emerging MarketsLocal marketing in• mature market• new growth markets• emerging marketsEmerging markets• Characterized by low levels ofproduct penetration, weaklyestablished marketinginfrastructure, relativelyunsophisticated consumers withweak purchasing power, and weakdomestic competitorsLocal Marketing in Emerging MarketsThe macroenvironment in the typical developing market ischaracterized by uncertaintyConsumer needs tend to be basic and easy to identifyMarket Segmentation• In these markets, income level represents the basic segmentationcriterion- Effective income measures are defined in terms of access to convertiblecurrency
  17. 17. 16Marketing-Mix in Emerging MarketsProduct Positioning• product policy a key issue• Customer needs tend to be basic and domestic alternatives weakPricing• The balance between affordability and upper-end positioning• The lack of purchasing power means that the marketer often must findways of offering a simpler productDistribution• Unless effective ways of distributing the product can be found orcreated, market entries might be thwarted and economic growth of thedeveloping countries will not take offPromotion• Promotion in developing markets is initially limited because of lack ofbroadcast mediaMarketing in ChinaChina has a population of 1.2 billion people which isthe largest in the world• With its underlying strength in natural resources and ableand disciplined worker the Chinese economy has so farbeen relatively untouched by the Asian Crisis• Despite the size and potential of the Chinese market itsfast-growing purchasing power is still low• Market Segmentation- Geographic region- Urban/rural split in the typical emerging market pattern• Product Positioning- The China market is open for global brands andstandardized campaigns
  18. 18. 17Entry Barriers in ChinaImport License Controls• The Ministry of Foreign Trade and EconomicCooperation (MOFTEC)Protective Tariffs• With the entry into the WTO, the governmenthas promised to continue tariff reductions tomeet the level of the other WTO membersForeign Exchange Control• Foreign exchange is controlled by the StateAdministration of Foreign Exchange ControlForeign Trading Companies• With ongoing reform, and WTO entry, thegovernment-controlled trading companieshave lost their monopolyMarketing in ChinaProduct Policies• Chinese consumer buy foreign productsbecause of no availability of similar productsand the superior quality of foreign productsPricing• Most Chinese customers are price-orientedout of habit and are not willing to pay more foralleged superior qualityDistribution• Most distribution channels are controlled bythe government• Guanxi: Mutual good feeling and trustPromotion• Strictly controlled by the government
  19. 19. 18Westernization of Chinese ConsumersChristmas shopping isbecoming more important thanSpring festivalDepartment stores usex-mas decoration like SantaClauses, trees with lights, bellsetcTrend across all generationsand social classesImportance of Guanxi(good relations or connections)“Guanxi seems to be the lifeblood of the Chinese businesscommunity, extending into politics and society. Withoutguanxi one simply cannot get anything done … withguanxi anything seems possible”(Davis/Leung/Wong, Benefits of Guanxi, in: IMM, 1989)To overcome distrust among partners, Chinese developfamily-like links, more extensively than almost any othernationFamily is a system of contacts rather than purely anemotional unit as in the WestIndividuals make decisions on the basis of family ties orsocial connections rather than objective issuesLong-term not short-term phenomenonRequirements for Guanxi• Each party is fully committed to each other• Honor your obligationsSource: Tang/Reisch; Erfolg in China-Geschäft
  20. 20. 19Cultural DifferencesPresent yourself Highlight yourself Be part of a groupSelf confident Enjoy respectBe dynamic and pushy Be helpful, co-operativeDiscussion behaviour Offensive, direct Defensive, indirect, discreetInquisitive, active Hesitant, reactiveEngaged, emotional Relaxed, patientCollegial Respectful, distancedConflict management Confront conflicts IgnoreBe more specific GeneraliseDramatisize Relaxed attitideReject, deny Pull back;no direct feedbackSource: Tang/Reisch; Erfolg in China-GeschäftThe Automotive Industry in China
  21. 21. 20China … land of extremesChina … land of extremes
  22. 22. 21The automotive boom will bringproblemsPeople living in metropolitan areas= 480 Mill (=EU + USA)Only 1% of city residents own a car,though 32% intend to by one in thenext 5 yearsAs a consequence• Pollution• Traffic jams• Cities get bigger and cars will benecessary to travelLight Vehicle Sales in ChinaSource:J.D.Power&Associates;in:www.awknowlege.com;June200301234561990 1992 1994 1996 1998 2000 2002 2003(est)Mio UnitsOver 1 mill passenger carsin 2002 and over 3 mill in 20082008(est)2019(plan)30Goal for 2019:Worldwide largestcar market
  23. 23. 22Key figures of the Chinese car marketAround 100 automotive manufacturers• Most produce less than 100.000 units pa40 to 50 new models introduced in 2003 by foreign joint venturesIntense price competition• Price declined by about 8% in 2003, following 7-8% in 200290% of car purchases are done by cash• China´s local consumer financing companies have yet to providesufficient and sophisticated lending services• Chance: new consumer groups can afford a carSource: J.D. Power & Associates; in: www.awknowlege.com; June 2003Taxi companies are key customersSales dominated by company (esp Taxi) and governmentcustomers; sales to private customers increase strongly• Meanwhile over 50% private sales
  24. 24. 23Impact of World Trade OrganisationOpens the market and increases competitionClassical Management functions become more important• Marketing• Human Resources Management• AccountingLocal Production vs. Import• Less market entry barriersWholly Foreign Owned Enterprises versus Joint VenturesAutomotive impact• Less import tariffs from 80-100% to 25% by 2006• No import quotas by 2005- Licensing law: a limited number of license plates are released every month, which must be bidon at monthly auctions (ie October 2002 3,200 plates for an average price of US$ 3,500)• Independent sales without Chinese Partners• Foreign financial institutes are allowed to offer automotive financeSource: M. Taube, Universität Duisburg-EssenVolkswagen´s investment into China1984 Joint VentureShanghai Volkswagen Automotive Ltd• Sales 2002: 300.000 units• Employees 2000: 11.000 pers1991 Joint VentureFirst Automotive WorksVolkswagen Ltd• Sales 2002: 210.000 units• Employees 2000: 7.000 pers1978 first meetings of Volkswagen in ChinaToyota and General Motors were first choice partner of China; however, both decided not to invest at that stage
  25. 25. 24Challenges of co-operativeinternationalisation strategies in ChinaMarketLack of efficient legal frameworkClosed market• High tariffs• Import quotas• Chinese majority joint ventures• Increasing local-contentManagementDifferent business styles andvaluesCorruptionBureaucracyLanguage problemsDifferent learning structuresDifficult to find skilled staffSource: Mercado Solutions Asia Ltd. 2000; Bennett 1998, p. 190; Posth/ Bergmann 1995Joint Ventures from a non-Chinese carmanufacturer’s viewPros• Market entry intoprotected market• Lower tariffs• Contact to localauthoritiesCons• Long starting process• Difficult to manage and lead• Lack of skilled personnel• Must buy parts locally• Knowledge transfer• Difficult to control sales and servicenetwork• Image of locally produced product• Danger of know-how transfer not onlyfrom foreign joint-venture to chinesepartner but also to other foreigninvestors- FAW: Volkswagen, Toyota, Mazda- SAIC: Volkswagen, GM, Isuzu
  26. 26. 25Case 3.2 Levi Strauss Japan K.K.Selling Jeans in JapanDISCUSSION QUESTIONS:1. What are the key success factors (KSFs) in theJapanese marketplace?2. To what extent do the Levi Strauss FSAs andCSAs match the KSFs. How has Levis beenable to leverage its country-of-origin to becomea leading brand? Can other American jeans dothe same?3. How would you explain the apparent success ofLSJs advertising campaign stressing Americanvalues in Japan?4. List the pros and cons of the differentdistribution alterna-tives facing LSJ. Which onedo you think has the best chance ofsucceeding?5. Would you retain the premium positioning ofLevis in Japan? Why/Why not?Weekly ProgrammeObjective Topics ReadingsWEEK 1: Introduction: Fundamentals of International MarketingWEEK 2: Market Entry OptionsWEEK 3: Local MarketingWEEK 4: Global Marketing (I) Brand and Product StrategiesDiscuss the emergence ofstandardized global brand andproduct marketing strategiesStandardizationBrand ManagementProduct StrategyGlobal Servicesext: Chapter 11-12ase: Disney in France; in Hill,International BusinessWEEK 5: Global Marketing (II) Price, Distribution and Advertising StrategiesWEEK 6: Salesforce Management and Marketing Organisation

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