International Business
Sixteenth Edition, Global Edition
Chapter 10
Global Marketing
Copyright © 2018 Pearson Education Limited. All Rights Reserved.
Learning Objectives (1 of 2)
17-1 Classify international marketing strategies in
terms of marketing orientations, segmentation,
and targeting
17-2 Discuss the pros and cons of adaptation
versus global standardization of products
17-3 Describe pricing complexities when selling in
foreign markets
Copyright © 2018 Pearson Education Limited. All Rights Reserved.
Learning Objectives (2 of 2)
17-4 Recognize the advantages and problems of
using uniform promotional marketing practices
among countries
17-5 Explain the different branding strategies
companies may employ internationally
17-6 Discern major practices and complications of
international distribution
17-7 Illustrate how gap analysis can help in
managing the international marketing mix
Copyright © 2018 Pearson Education Limited. All Rights Reserved.
Common Marketing Orientations
• Production orientation
• Sales orientation
• Customer orientation
• Strategic marketing orientation
• Social marketing orientation
Copyright © 2018 Pearson Education Limited. All Rights Reserved.
Common Marketing Orientations
1) Production Orientation: managers concentrate on production by
assuming that customers simply want products with lower prices,
higher quality, or whatever they sell domestically.
2) Sales Orientation: A company sells abroad what it sells
domestically by assuming that consumers are sufficiently similar.
3) Customer orientation What and how can the company sell in
country A or to a particular type of consumer? In this case, the
country or type of consumer is held constant and the product and
marketing method vary. An MNE may most likely take this
approach because the country’s size and growth potential or the
consumer type is attractive.
Copyright © 2018 Pearson Education Limited. All Rights Reserved.
Common Marketing Orientations
4) Strategic Marketing Orientation Companies
committed to continual rather than sporadic foreign
sales usually adopt a strategy that combines
production, sales, and customer orientations.
5) Social Marketing Orientation Companies with social
marketing orientations pay close attention to the
potential environmental, health, social, and work-
related problems that may arise when selling or making
their products.
Video: [Link]
Copyright © 2018 Pearson Education Limited. All Rights Reserved.
Segmenting Global Markets
❑ Segmentation is a way to cut the larger population into
smaller groups or categories of people with similar needs,
wants, and demands.
❑ Bases for segmenting consumer markets:
1) Demographic: Age, gender, income, education,…etc
2) Geographic: based georgraphic location (area, country,
region,…etc)
3) Psychographic: Activities, interests, lifestyle
4) Behavioral: Usage rate, usage occasion, usage status, loyalty
status.
5) Multiple segmentation: combination of more than one of the
above.
Copyright © 2018 Pearson Education Limited. All Rights Reserved.
Segmenting and Targeting Markets
Internationally, segmentation and targeting may take place at a
global or country level.
• By global segment: An MNE may identify some global
segments that transcend countries. Thus, each country may
have some people within the same segment, but the
proportional and actual size of the segment will vary by
country. For instance, Red Bull targets a global, athletically
minded, young-adult market.
• By country: Let’s say a company decides to go to the
Canadian market. It may modify its global segmentation to fit
Canadian nuances, for example by including regional ethnic
differences.
Copyright © 2018 Pearson Education Limited. All Rights Reserved.
Segmenting and Targeting Markets
• Mixing the marketing mix: A company may hold one or more
elements of its marketing functions—prices, promotion,
branding, and distribution— constant while altering the others.
• Mass markets Versus niche markets: Because the
percentage of people who fall into any segment varies among
countries, a niche market in one country may be a mass
market in another
Copyright © 2018 Pearson Education Limited. All Rights Reserved.
Country Adaptation vs. Global Standardization
Why firms adapt products to a specific country or region?
a) Legal considerations such as labeling requirement
differences and/or environmental protection regulations,
Example: Pharmaceuticals and foods are particularly subject to regulations
concerning purity, testing, and labeling, while automobiles must conform to
diverse safety, pollution, and fuel-economy standards.
b) Cultural considerations Religious differences obviously
limit the standardization of product offerings globally, such
as the limitation of pork product sales by food franchises
in Islamic countries.
c) Economic considerations might include things like
income level and income distribution, and infrastructure.
Copyright © 2018 Pearson Education Limited. All Rights Reserved.
Potential Issues in Pricing
• Government intervention
• Market Diversity
• Export Price Escalation
• Fluctuations in Currency
• Fixed versus Variable pricing
Copyright © 2018 Pearson Education Limited. All Rights Reserved.
Potential Issues in Pricing
Government Intervention
• Every country has laws that affect the prices of goods.
• Minimum prices are usually set to prevent companies from
eliminating competitors and gaining monopoly positions.
• Maximum prices are usually set so that poor consumers
can buy products and services.
Copyright © 2018 Pearson Education Limited. All Rights Reserved.
Potential Issues in Pricing
Market Diversity
▪ Country-of-origin stereotypes also limit pricing possibilities.
• Preference for cash versus credit buying affects demand.
When a company has considerable pricing discretion, it may use
any of the following tactics: حرية التصرف
➢A skimming strategy—charging a high price for a new product
by aiming first at consumers willing to pay that much, then
progressively lowering the price to sell to other consumers.
➢A penetration strategy—introducing a product at a low price
to induce a maximum number of consumers to try it.
➢A cost-plus strategy—pricing at a desired margin over cost.
Copyright © 2018 Pearson Education Limited. All Rights Reserved.
Potential Issues in Pricing
Export Price Escalation
▪ Export prices generally rise by more than increased transport
and duty costs, thus exporters may have to lower margins to
make sales.
• Seemingly exportable products may turn out to be
noncompetitive abroad if companies in the value chain use
cost-plus pricing—which many do.
• To become competitive in exporting, a company may have to
sell its product to intermediaries at a lower price or convince
intermediaries to lower their margins to lessen the amount of
escalation.
Video: [Link]
Copyright © 2018 Pearson Education Limited. All Rights Reserved.
Potential Issues in Pricing
Fluctuations in Currency Value
❑ Two pricing problems occur because of inflationary conditions:
1) The receipt of funds in a foreign currency that, when
converted, buy less of the company’s own currency than had
been expected.
2) The frequent readjustment of prices necessary to
compensate for continual cost increases.
• The company sometimes can specify within sales contracts an
equivalency in some hard currency.
For example, a U.S. firm’s sale to a company in Venezuela may specify that
payment be made in dollars or in bolívars at an equivalent price in terms of dollars
at the time payment is made.
Copyright © 2018 Pearson Education Limited. All Rights Reserved.
Potential Issues in Pricing
Fixed Versus Variable Pricing
• MNEs often negotiate their export prices with importers.
• Small firms, especially those from developing countries,
frequently give price concessions too quickly, limiting their
ability to negotiate on a range of marketing factors that affect
their costs.
• There are country-to-country differences in:
a) whether prices are fixed or bargained in stores,
b) where and for what products bargaining occurs.
• Some people, regardless of culture, avoid price negotiation
even when they know they may gain economically by doing so.
Copyright © 2018 Pearson Education Limited. All Rights Reserved.
Some Problems in International Promotion
Advertising Standardization
• Advantages of standardizing Advertising
• Some cost savings.
• Better quality at the country level (because local
agencies may lack expertise),
• A common image globally.
• Rapid entry into different countries.
• Considerations when standardizing
I. Translation
II. Legality: Some ads to children are prohibited.
III. Message Needs: According to product lifecycle.
Copyright © 2018 Pearson Education Limited. All Rights Reserved.
Some Problems in International Promotion
The Internet
• The growth in products’ online availability through the Internet
creates new promotional and distributional opportunities and
challenges.
• Through e-commerce, customers worldwide can quickly
compare prices from different distributors, which drives prices
down.
• Through the growing use of social media, they can obtain
better information to compare the quality and reliability of
products and distributors.
• Further, a switch to Internet sales may risk upsetting existing
distributors and, if unsuccessful, make future sales more
difficult
Copyright © 2018 Pearson Education Limited. All Rights Reserved.
Global Branding
• A brand is an identifying mark for products or
services.
• If it is legally registered, it is a trademark.
• A brand gives a product or service instant recognition and may
save promotional costs.
• Because companies have spent heavily in the past to create
brand awareness, many brands are worth billions of dollars
and are the most valuable assets firms possess.
Copyright © 2018 Pearson Education Limited. All Rights Reserved.
Advantages of A Global Brand
• Some companies, such as Apple, use the same brand and
logo for most of their products around the world. This helps
develop a global image, especially for customers who
travel internationally.
• In addition, there is evidence that the use of global brands
helps identify companies as global players, which many
consumers view more favorably.
Copyright © 2018 Pearson Education Limited. All Rights Reserved.
Working with Product Distribution
• Internalization of distribution?
• Factors favoring internalization
• Distribution partnerships as an option.
• Companies who choose to use distributors:
• May need to give incentives.
• Must convince distributors that product and company are
viable.
Copyright © 2018 Pearson Education Limited. All Rights Reserved.
االستيعاب الداخلي للنوزيع
Internalization of Distribution
Should companies handle their own distribution? Or
should they contract other companies to do it for them?
• When sales volume is low, a company usually must rely on
external distributors to be more economical.
• As sales grow, it may handle some distribution itself to gain
more control.
• However, such internalization may still be difficult for small
firms that lack necessary resources.
• Nevertheless, companies may limit early distribution costs
if they are able to sell regionally before moving nationally.
Copyright © 2018 Pearson Education Limited. All Rights Reserved.
Which Distributors are Best Qualified?
These criteria for selecting distributors include :
• the distributor’s financial strength,
• its good connections,
• the extent of its other business commitments,
• its current status.
Copyright © 2018 Pearson Education Limited. All Rights Reserved.
Factors Favoring Internalization
Distribution may be handled internally:
• when companies have sufficient resources,
• when there is a need to deal directly with the
customer because of the product’s nature,
• when the customer is global,
• when the distribution form is a competitive
advantage.
Copyright © 2018 Pearson Education Limited. All Rights Reserved.
What is GAP analysis?
• A company should calculate how well it is doing in each
country, how it might do better, and how to gain synergy
among marketing activities in different countries. One such
tool is gap analysis,
• Gap analysis: The difference between total market potential
and a company’s sales is due to several types of gaps:
• Types of GAPS
• Usage—collectively, all competitors sell less than the market potential.
• Product line—the company lacks some product variations
• Distribution—the company misses coverage by geography or type of
outlet.
• Competitive—competitors’ sales are not explained by product-line and
distribution gaps. It could be because of their image, prices, and ads
Copyright © 2018 Pearson Education Limited. All Rights Reserved.
GAP Analysis Process
Figure 17.3 Gap Analysis
Copyright © 2018 Pearson Education Limited. All Rights Reserved.
Copyright © 2018 Pearson Education Limited. All Rights Reserved.