4.6 international marketing

international marketing

• selling products in markets outside domestic market

• globalisation led to improved comms, access to e-commerce, transport links, freer international trade

opportunities of international marketing

• enter growing markets when domestic market is saturated

• spread out risk of domestic market being affected by threats

• diversify, can continue growing despite increased competition in domestic market

• low costs in emerging markets → increase profits

• higher consumer spending power in countries with high GDP → increase sales

• EOS

threats

• different consumer demands → need increase marketing expenses so that can adapt

• cultural differences

• competition from local producers → favoured by locals/gov

• some countries have counterfeit goods → undermine reputation and profit margins

• transport costs

• different legal requirements

how to maximise opportunities/reduce threats?

1. method of entry

2. recognise cultural differences (hofstede’s cultural dimensions)

3. adopt the most appropriate marketing strategy: pan-global marketing vs global localisation

methods of entry

• direct exporting

• international franchising

• joint ventures

• licensing

• direct investment in subsidiaries

direct exporting

• through ecommerce

• adv

  • profit not shared with another business (unless use agent to promote and distribute)

  • control over marketing strategy

• disadv

  • lack of knowledge on local market

  • all risk belongs to exporter

  • import tariffs

international franchising

• adv

  • franchisees have local knowledge

  • franchisees contribute to capital costs (by buying license)

  • franchisee handles operations

• disadv

  • loss of control

  • franchisees may damage brand image

licensing

• license third party to manufacture and sell the product

• adv

  • reduces capital costs of setting up own operations and production

  • licensee has local knowledge

• disadv

  • loss of control over quality of product/marketing

  • profit margin reduced since third party is involved

joint ventures

• might be the only possible approach since some govs may insist on local partners

• adv

  • partner has local knowledge

  • partner contributes capital

  • shared risk and management responsibilities

• disadv

  • culture clash between managers

  • shared profits

  • partner may impact brand image

  • loss of control over ops and marketing

direct investment in subsidiaries

• FDI but in the form of a takeover

• adv

  • complete control over ops

  • subsidiary has local knowledge

  • existing ops will enable quicker entry to market than setting up new facilities

• disadv

  • culture clash between parent company and subsidiary

  • strict local laws wrt takeovers and making local employees redundant

  • difficult to value subsidiaries → may over-pay for existing facilities/local knowledge

hofstede’s cultural dimensions (quick recap of dimensions)

• power distance

• individualism vs collectivism

• uncertainty avoidance

• masculinity vs femininity

• long-term vs short-term orientation

• indulgence vs restraint

pan-global marketing

• selling a standardised good across all countries → in order to exploit EOS

• important for

  • upmarket brands: international appeal for exclusivity/opportunity to buy same product as international celebrities → consumers do not want a variation

  • mass-appeal brands: EOS

• adv

  • common brand identity → improves brand recognition

  • exploit technical/marketing EOS → reduce costs

  • younger consumers have similar tastes internationally

• disadv

  • loss of market opportunities (eg religious/cultural variations)

  • legal restrictions wrt product and promotion

  • brand names not translated effectively

  • setting the same price glovally ignores differences in in average income

global localisation

• adapt marketing mix to different consumer demands across countries

  • franchisees retain the benefits/security of operating under an MNC but local marketing mix is differentiated

  • region-exclusive products, varied prices based on average incomes, promotional material includes locals, different distribution methods

• adv

  • meet local demands → higher sales and profits

  • no attempt to impose foreign brands on regional markets

  • can meet legal requirements

  • less opposition from locals

• disadv

  • unable exploit EOS

  • loss of brand identity (local adaptations become more popular than standard product)

  • increased marketing expenses