This document discusses entering foreign markets and new product development. It begins with an overview of the major decisions involved in international marketing, such as deciding which markets to enter, how to enter the market, and determining the marketing program and organization. Next, it discusses how companies evaluate potential foreign markets, with examples of considering neighboring countries first due to understanding their culture and controlling costs more effectively. The document also outlines Bechtel Corporation's process for strategic market analysis and criteria for ideal new markets.

2. Welcome
Marketing 571, Class 4
August / July 2009
Lawrence Linn

4. video

5. Housekeeping
• Group assignment
• Sliderocket
• Road trip!

7. Concept Review

8. HOW TO BRIDGE
THE DISTANCE
BETWEEN
BUSINESS STRATEGY
AND DESIGN

9. So what exactly
is a brand?
NEUTRONLLC.COM

10. A BRAND IS A PERSON’S
GUT FEELING ABOUT
A PRODUCT, SERVICE,
OR ORGANIZATION.
NEUTRONLLC.COM

12. IT’S NOT WHAT YOU SAY IT IS.
NEUTRONLLC.COM

13. IT’S WHAT THEY SAY IT IS.
NEUTRONLLC.COM

14. Seth Godin

15. Seth Godin

17. Topic
New Product Development

18. =;>3"7H383"79;B3<558"3553?76E3@K:"=<87"569=8"4<G"E63G"A9<BC?7"B3E3@<A=347"
L0MN";8";4"34BD7<D34B"A9<?388"7H;7"B9;G8"<4"=;9>3764I:"34I6433964I:"=;4C5;?D
7C964I:";4B"<9I;46J;76<4;@"B3E3@<A=347"7H9<CIH<C7"7H3"A9<BC?7"B3E3@<A=347"?KD
?@31""
5,4(6'10
3#'.,"%4 8,4%('6 9/&'.:
7'6(',,$
01*+,/12,',$/%(#'
*+,'%(-(./%(#'
!""#$%&'(%)
!
!"#$%&'()''*%+,$-.'/&0&1+23&4.'!$44&1'
"
$H3"0M"?K?@3"68"B3A6?73B"64"O6IC93"P";8";"5C443@1""$H3"5C443@"93A9383478"
Hauser, John R. (2008), “Note on Product Development”
7H3"79;B676<4;@"E63G"7H;7"0M"A9<?33B8"64"87;I38";8"=;4K"6B3;8";93"G644<G3B";4B"

20. Simplicity Sells

21. ...but not too simple

22. New frontiers in product development

23. interact
New frontiers in product development

26. Topic
Entering foreign markets

27. Red Bull Marketing Campaign, 2009

28. video
Red Bull Marketing Campaign, 2009

30. ile
al- Deciding whether
he to go abroad
ee
8
• Why market internationally?
nd
Deciding which
er- markets to
ed enter • How do you decide where?
ms
Deciding how
ad to enter the
ry market
in
re
Deciding on
the marketing
program
ge
r- Deciding on
s- the marketing
organization
re
es
| FIG. 21.1 |
Major Decisions in International
Marketing
tic

31. products and services and its attractiveness as a market to foreign firms depend o
Direct nomic, political-legal, and cultural environments.
investment Suppose a company has assembled a list of potential markets to enter. How does
• Somebody explain this to me
among them? Many companies prefer to sell to neighboring countries because the
stand these countries better and can control their costs more effectively. It is not s
that the two largest U.S. export markets are Canada and Mexico, or that Swedish co
first sold to their Scandinavian neighbors. As growing numbers of U.S. companie
Joint
• Can we have some examples?
abroad, many are deciding the best place to start is next door.
Commitment, Risk, Control, and Profit Potential
ventures
At other times, psychic proximity determines choices. Many U.S. firms prefer
Canada, England, and Australia—rather than in larger markets such as Germany and
because they feel more comfortable with the language, laws, and culture. Compani
be careful, however, in choosing markets according to cultural distance. Besides the
potentially better markets may be overlooked, it also may result in a superficial an
Licensing
some very real differences among the countries. It may also lead to predictable m
actions that would be a disadvantage from a competitive standpoint.24
Regardless of how chosen, it often makes sense to operate in fewer countrie
deeper commitment and penetration in each. In general, a company prefers to en
Direct tries (1) that rank high on market attractiveness, (2) that are low in market risk, a
exporting which it possesses a competitive advantage. Here is how Bechtel Corporation, the c
tion giant, goes about evaluating overseas markets.
B E C H T E L C O R P O R AT I O N
Indirect Bechtel provides premier technical, management, and directly related services to develop, manage
exporting
build, and operate installations for customers in nearly 60 countries worldwide. Before Bechtel ventur
markets, the company starts with a detailed strategic market analysis. It looks at its markets and trie
mine where it should be in four or five years’ time. A management team does a cost-benefit analys
| FIG. 21.2 | tors in the position of competitors, infrastructure, regulatory and trade barriers, and the tax situation
porate and individual). Ideally, the new market should be a country with an untapped need for its p
Five Modes of Entry into Foreign services; a quality, skilled labor pool capable of manufacturing the product; and a welcoming environ
Markets ernmental and physical).

32. products and services and its attractiveness as a market to foreign firms depend o
Direct nomic, political-legal, and cultural environments.
investment Suppose a company has assembled a list of potential markets to enter. How does
• Somebody explain this to me
among them? Many companies prefer to sell to neighboring countries because the
stand these countries better and can control their costs more effectively. It is not s
that the two largest U.S. export markets are Canada and Mexico, or that Swedish co
first sold to their Scandinavian neighbors. As growing numbers of U.S. companie
Joint
• Can we have some examples?
abroad, many are deciding the best place to start is next door.
Commitment, Risk, Control, and Profit Potential
ventures
At other times, psychic proximity determines choices. Many U.S. firms prefer
Canada, England, and Australia—rather than in larger markets such as Germany and
because they feel more comfortable with the language, laws, and culture. Compani
be careful, however, in choosing markets according to cultural distance. Besides the
potentially better markets may be overlooked, it also may result in a superficial an
Licensing
some very real differences among the countries. It may also lead to predictable m
actions that would be a disadvantage from a competitive standpoint.24
Regardless of how chosen, it often makes sense to operate in fewer countrie
deeper commitment and penetration in each. In general, a company prefers to en
Direct tries (1) that rank high on market attractiveness, (2) that are low in market risk, a
exporting which it possesses a competitive advantage. Here is how Bechtel Corporation, the c
tion giant, goes about evaluating overseas markets.
B E C H T E L C O R P O R AT I O N
Indirect Bechtel provides premier technical, management, and directly related services to develop, manage
exporting
build, and operate installations for customers in nearly 60 countries worldwide. Before Bechtel ventur
markets, the company starts with a detailed strategic market analysis. It looks at its markets and trie
mine where it should be in four or five years’ time. A management team does a cost-benefit analys
| FIG. 21.2 | tors in the position of competitors, infrastructure, regulatory and trade barriers, and the tax situation
porate and individual). Ideally, the new market should be a country with an untapped need for its p
Five Modes of Entry into Foreign services; a quality, skilled labor pool capable of manufacturing the product; and a welcoming environ
Markets ernmental and physical).

33. products and services and its attractiveness as a market to foreign firms depend o
Direct nomic, political-legal, and cultural environments.
investment Suppose a company has assembled a list of potential markets to enter. How does
• Somebody explain this to me
among them? Many companies prefer to sell to neighboring countries because the
stand these countries better and can control their costs more effectively. It is not s
that the two largest U.S. export markets are Canada and Mexico, or that Swedish co
first sold to their Scandinavian neighbors. As growing numbers of U.S. companie
Joint
• Can we have some examples?
abroad, many are deciding the best place to start is next door.
Commitment, Risk, Control, and Profit Potential
ventures
At other times, psychic proximity determines choices. Many U.S. firms prefer
Canada, England, and Australia—rather than in larger markets such as Germany and
because they feel more comfortable with the language, laws, and culture. Compani
be careful, however, in choosing markets according to cultural distance. Besides the
potentially better markets may be overlooked, it also may result in a superficial an
Licensing
some very real differences among the countries. It may also lead to predictable m
actions that would be a disadvantage from a competitive standpoint.24
Regardless of how chosen, it often makes sense to operate in fewer countrie
deeper commitment and penetration in each. In general, a company prefers to en
Direct tries (1) that rank high on market attractiveness, (2) that are low in market risk, a
exporting which it possesses a competitive advantage. Here is how Bechtel Corporation, the c
tion giant, goes about evaluating overseas markets.
B E C H T E L C O R P O R AT I O N
Indirect Bechtel provides premier technical, management, and directly related services to develop, manage
exporting
build, and operate installations for customers in nearly 60 countries worldwide. Before Bechtel ventur
markets, the company starts with a detailed strategic market analysis. It looks at its markets and trie
mine where it should be in four or five years’ time. A management team does a cost-benefit analys
| FIG. 21.2 | tors in the position of competitors, infrastructure, regulatory and trade barriers, and the tax situation
porate and individual). Ideally, the new market should be a country with an untapped need for its p
Five Modes of Entry into Foreign services; a quality, skilled labor pool capable of manufacturing the product; and a welcoming environ
Markets ernmental and physical).

34. products and services and its attractiveness as a market to foreign firms depend o
Direct nomic, political-legal, and cultural environments.
investment Suppose a company has assembled a list of potential markets to enter. How does
• Somebody explain this to me
among them? Many companies prefer to sell to neighboring countries because the
stand these countries better and can control their costs more effectively. It is not s
that the two largest U.S. export markets are Canada and Mexico, or that Swedish co
first sold to their Scandinavian neighbors. As growing numbers of U.S. companie
Joint
• Can we have some examples?
abroad, many are deciding the best place to start is next door.
Commitment, Risk, Control, and Profit Potential
ventures
At other times, psychic proximity determines choices. Many U.S. firms prefer
Canada, England, and Australia—rather than in larger markets such as Germany and
because they feel more comfortable with the language, laws, and culture. Compani
be careful, however, in choosing markets according to cultural distance. Besides the
potentially better markets may be overlooked, it also may result in a superficial an
Licensing
some very real differences among the countries. It may also lead to predictable m
actions that would be a disadvantage from a competitive standpoint.24
Regardless of how chosen, it often makes sense to operate in fewer countrie
deeper commitment and penetration in each. In general, a company prefers to en
Direct tries (1) that rank high on market attractiveness, (2) that are low in market risk, a
exporting which it possesses a competitive advantage. Here is how Bechtel Corporation, the c
tion giant, goes about evaluating overseas markets.
B E C H T E L C O R P O R AT I O N
Indirect Bechtel provides premier technical, management, and directly related services to develop, manage
exporting
build, and operate installations for customers in nearly 60 countries worldwide. Before Bechtel ventur
markets, the company starts with a detailed strategic market analysis. It looks at its markets and trie
mine where it should be in four or five years’ time. A management team does a cost-benefit analys
| FIG. 21.2 | tors in the position of competitors, infrastructure, regulatory and trade barriers, and the tax situation
porate and individual). Ideally, the new market should be a country with an untapped need for its p
Five Modes of Entry into Foreign services; a quality, skilled labor pool capable of manufacturing the product; and a welcoming environ
Markets ernmental and physical).

35. MARKETING INSIGHT GLOBAL STANDARDIZATION OR ADAPTATION?
The marketing concept holds that consumer needs vary and that following elements and determine which would add more revenue
marketing programs will be more effective when they are tailored to than cost:
each target group. This also applies to foreign markets. Yet in 1983,
in a groundbreaking article in the Harvard Business Review, Harvard
I Product features
Professor Theodore Levitt challenged this view and supplied the intel- I Brand name
lectual rationale for global standardization: “The world is becoming a I Labeling
common marketplace in which people—no matter where they live— I Packaging
desire the same products and lifestyles.”
The development of the Web, the rapid spread of cable and satel- I Colors
lite TV around the world, and the global linking of telecommunications I Advertising execution
networks have led to a convergence of lifestyles. The convergence of I Materials
needs and wants has created global markets for standardized prod-
I Prices
ucts, particularly among the young middle class.
Levitt favors global corporations that try to sell the same product I Sales promotion
the same way to all consumers. They focus on similarities across I Advertising themes
world markets and “sensibly force suitably standardized products and I Advertising media
services on the entire globe.” These global marketers achieve
economies through standardization of production, distribution, mar- Consumer behavior can dramatically differ across markets. Take
keting, and management. They translate their efficiency into greater annual beverage consumption. One of the highest per capita con-
value for consumers by offering high-quality and more reliable prod- sumers of carbonated soft drinks is the United States, with 203.9
ucts at lower prices. liters per capita consumption; Italy is among the lowest. But Italy is
Coca-Cola, McDonald’s, Marlboro, Nike, the NBA, and Gillette are one of the highest per capita drinkers of bottled water with 164.4
among the companies that have successfully marketed global prod- liters, whereas the United Kingdom is only 20 liters. When it comes to
ucts. Consider Gillette: Some 1.2 billion people use at least one beer, Ireland and the Czech Republic lead the pack, with over 150
Gillette product daily, according to the company’s estimates. Gillette liters per capita, with France among the lowest at 35.9 liters.
enjoys huge economies of scale by selling a few types of razor blades Besides demand-side differences, other types of supply-side dif-
in every single market. ferences can also prevail. Levitt’s critics pointed out that flexible
Many companies have tried to launch their version of a world manufacturing techniques made it easier to produce many different
product. Yet, most products require some adaptation. Toyota’s Corolla product versions, tailored to particular countries. One study showed
will exhibit some differences in styling. McDonald’s offers a ham and that companies made one or more marketing-mix adaptations in 80
cheese “Croque McDo” in France, a variation of the French favorite percent of their foreign products and that the average number of
croque monsieur. Coca-Cola is sweeter or less carbonated in certain adapted elements was four. So perhaps Levitt’s globalization dictum
countries. Rather than assuming that its domestic product can be should be rephrased. Global marketing, yes; global standardization,
introduced “as is” in another country, the company should review the not necessarily.
Sources: Theodore Levitt, “The Globalization of Markets,” Harvard Business Review (May–June 1983): 92–102; Bernard Wysocki Jr., “The Global Mall: In
Developing Nations, Many Youths Splurge, Mainly on U.S. Goods,” Wall Street Journal, June 26, 1997, p. A1; “What Makes a Company Great?” Fortune,
October 26, 1998, pp. 218–226; David M. Szymanski, Sundar G. Bharadwaj, and P. Rajan Varadarajan, “Standardization versus Adaptation of International
Marketing Strategy: An Empirical Investigation,” Journal of Marketing (October 1993): 1–17; “Burgers and Fries a la Francaise,” The Economist, April 17,
2004, pp. 60–61; Johny K. Johansson, “Global Marketing: Research on Foreign Entry, Local Marketing, Global Management,” in Handbook of Marketing,
edited by Bart Weitz and Robin Wensley (London: Sage Publications, 2002), pp. 457–483.

43. Topic
Channel Strategies

44. What is your companies
distribution channel?

45. interact
What is your companies
distribution channel?

46. pany’s recycling center in California.9
FIGURE 13.3 Consumer and Industrial Marketing Channels
(a) Consumer marketing channels (b) Industrial marketing channels
0-level 1-level 2-level 3-level 0-level 1-level 2-level 3-level
Manufacturer Manufacturer Manufacturer Manufacturer Manufacturer Manufacturer Manufacturer Manufacturer
Manufacturer's Manufacturer's
Wholesaler Wholesaler
representative sales branch
Jobber
Industrial
Retailer Retailer Retailer
distributors
Industrial Industrial Industrial Industrial
Consumer Consumer Consumer Consumer customer customer customer customer

47. 248 Part V Delivering Value
FIGURE 13.4 The Value-Adds Versus Costs of Different Channels
High
Sales force
Value-added
partners
Value-Add of Sale
Direct sales
Distributors channels
Retail stores
Telemarketing "Indirect" channels
Internet
Direct marketing
channels
Low
Low High
Cost per Transaction
Source: Oxford Associates, adapted from Dr. Rowland T. Moriarty, Cubex Corp.
CHANNEL-MANAGEMENT DECISIONS

49. Topic
Take home tip of the week

54. Topic
Road Trip!

56. video

57. Trader Joe’s Visit
• Stay out of the way of customers!
• No pictures
• Stay close - so we don’t have to shout
• Ask questions

58. Trader Joe’s Visit