PRODUCT DECISION (CHAPTER 10 TRONG SÁCH)

I. PRODUCT POLICY
1. Basic concepts of product:
●​ A product: a good/service/an idea, includes: tangible & intangible attributes
○​ Example:
■​ Apple’s tangible attributes: large screen size, vibrant color
■​ Apple’s intangible attributes: AppleCare (warranty service), Apple’s ecosystem, professional staff
●​ Product types:
(1) Consumer goods: Products for personal use (e.g., toothpaste, clothing)
(2) Industrial goods: Products used in production or operations (e.g., machinery, raw materials)
2. Definition & Scope
Product policy refers to decisions related to the development, management, and marketing of products in international
markets, including 2 dimensions: (1) Product planning and development & (2) Product strategy
(1)​ Product planning and development: the creation or modification of products to meet consumer needs and comply
with legal requirements in target markets.
●​ Coca-Cola: Offers region-specific flavors, like "green tea" in Japan, while keeping the core product
consistent globally.
●​ McDonald's: Adapts menu items for local tastes, such as the "McAloo Tikki" in India.
(2)​ Product strategy: Refers to determining whether to standardize products across global markets adapt them for
specific local markets (Adaptation vs. Standardization Strategy)
(3)​ r Apple iPhone: The product maintains a standardized design globally, but its software is customized to support
different languages and integrate popular local apps (e.g., WeChat in China).
●​ Toyota Hilux: Adapts the vehicle’s engine types (diesel in Africa) to meet local needs.
3. Characteristics
●​ Physical or Mandatory Requirements and Adaptation
○​ Product homologation is used to describe the changes mandated by local product and service standards.
■​ Physical Requirements: Adjusting products to meet the physical conditions (climate, infrastructure)
of the target market. Example: Apple adapted its iPhone chargers to fit different voltage systems
(120V in the U.S. vs 220V in Europe).
■​ Mandatory Adaptation: Changes enforced by governments or legal standards. Example: Updated
food packaging in Europe to include allergen warnings and multilingual labels.
■​ Voluntary Adaptation: Optional changes to enhance product acceptance by local consumers​.
Example: Introduced a vegetarian menu in India, offering items like the "Veg Zinger" burger due to
local dietary preferences
○​ Examples (Product homologation):
■​ Oreos in China were reformulated to be less sweet, with smaller packaging to match local taste
preferences and affordability
■​ Electrolux designed cold-water-only washing machines in Asia, where electricity costs are high
●​ Green Marketing and Product Development
○​ Green Marketing: a term used to identify concern with the environmental consequences of a variety of
marketing activities.
○​ Example: IKEA promotes sustainability through its "People & Planet Positive" campaign in multiple countries,
such as:
■​ In Sweden, IKEA has invested heavily in renewable energy.
■​ In the U.S., IKEA has introduced sustainable products like energy-efficient lighting and furniture
made from recycled materials
●​ Products and Culture:
○​ Cultural Influence on Products: Food, beverages, and other products are often adjusted to match local
tastes, customs, and traditions.
○​ Cultural Sensitivity: Modifying product names or formulations to avoid cultural offenses.
○​ Examples:
■​ McDonald's offers apple pies in the U.S., but in China, they sell red bean pies to align with local
preferences
■​ Coca-Cola changed "Diet Coke" to "Coke Light" in Japan as the word "diet" implies illness in their
culture​.
●​ Innovative Products and Adaptation:
○​ Innovative Products: New or improved products that are groundbreaking and align with the specific needs or
habits of consumers in different regions.
○​ Local Innovation: Localized solutions addressing specific needs, which can later be scaled globally​
 ○​ Examples:
■​ Unilever in India developed detergent tablets suitable for traditional handwashing
■​ Pepsi in Japan launched Ice Cucumber drinks as a short-term trend to generate excitement around
the brand
4. Decisions on products often depend on:
●​ Product Life Cycle (PLC): As products enter the maturity or decline stage, companies must consider innovations or
replacements. Examples: As older models like the iPhone X enter the decline stage, Apple introduces innovations
like the iPhone 15, ensuring its dominance in the smartphone market.
●​ The Importance of Innovation: Developing new products or improving current ones to remain competitive in global
markets. Example: Tesla unveiled the "Cybercab," a self-driving taxi without pedals or a steering wheel, aiming to
begin production in 2026.
5. So sánh giữa Adaptation và Standardization Strategies
Adaptation Standardization

Definition Adjusting products and strategies to fit local Using the same product and strategy across all
needs, cultures, and regulations. international markets.

Objective Satisfying local market needs and increasing Optimizing production and marketing costs while
competitiveness in each market. maintaining consistent global branding.

Advantages - Meets specific demands of individual markets. - Saves production and marketing costs.
- Enhances market penetration. - Ensures consistent global brand image.
- Aligns with local culture and regulations. - Achieves economies of scale.

Disadvantages - Higher costs due to localized development and - May not fit local needs or culture.
production. - Risk of failing to meet local customer
- Complex management due to constant expectations.
adjustments.

When to choose - Markets with diverse cultures and strict - Products with global appeal and less cultural
regulations. influence (e.g., electronics, luxury goods).
- Products requiring high customization (e.g.,
food, pharmaceuticals).
- Adjustments are needed to compete
effectively.

Examples - McDonald’s: Adjusted its menu with Teriyaki - Apple: Maintains identical design and features
Burger in Japan, Maharaja Mac in India. for iPhones globally.
- Cartier launched the "Red Box" collection for - Rolex does not change its iconic watch
the Chinese New Year, incorporating auspicious designs for specific markets, maintaining the
red and gold colors that resonate with Chinese same luxury appeal and technical precision
traditions. globally.
- One brand can combine Adaptation and Standardization strategies, especially luxury brands. For instance, Louis
Vuitton maintains its iconic monogram design globally (standardization) to reinforce its identity, while introducing smaller
handbags in Japan to suit local preferences and creating Lunar New Year collections in China with auspicious red and gold
designs (adaptation).

II. PRODUCT COMPONENTS FOR ADAPTATION

1. Three Components of a Product
 (1)​ Core Product: Alterations in design, functional features, flavors, color,
and other aspects can be made to adapt the product to cultural
variations. Includes: Product platform, design features & Functional
features
(2)​ Packaging: Protects the product and serves a promotional role.
Packaging must be adjusted to suit the language, culture, and legal
requirements of each market. Includes: Trademark, Brand name, Price
Quality, Package, Styling.
(3)​ Support Services: Includes deliveries, warranty, spare parts, repair &
maintenance, installation, instructions, and other related services.

Examples: Coca-Cola
In the U.S In other countries

Core Product Sweetened with high-fructose corn syrup, catering In Japan: Offers smaller, lighter flavors, such as
to American taste preferences for sweeter Coca-Cola Peach, and sugar-free options to align
beverages. with local preferences for unique, seasonal, and
healthier drinks.

Packaging Uses standardized red cans and bottles with In China: Uses red packaging featuring Chinese
English branding, emphasizing the iconic characters for “Coca-Cola” (可口可乐), which
Coca-Cola logo translates to "Delicious Happiness," to appeal to
cultural and linguistic preferences

Support Includes vending machines with loyalty reward In India: Focuses on extensive distribution
Services programs and Coca-Cola Freestyle machines for networks to reach rural areas, providing
customizable flavors. maintenance services for coolers and refrigeration
units to local retailers.
2. Adaptation Drivers
●​ Cultural differences and consumer expectations. Example: McDonald’s in India: Adapts its menu to exclude beef and
pork due to cultural and religious preferences, offering items like the McSpicy Paneer and McAloo Tikki instead.
●​ Legal and economic environments: Example: Google in Europe adjusted its data privacy policies to comply with the
EU’s General Data Protection Regulation (GDPR), ensuring transparency and user control over personal data.

III. COUNTRY-OF-ORIGIN EFFECT AND GLOBAL BRANDS

1. COO Effect:
●​ Country-of-Origin Effect refers to how the origin of a product influences consumer perceptions and purchasing
decisions → often seen as an indicator of quality
●​ Perceptions about and attitudes toward particular countries often extend to products and brands known to originate
in those countries: Japan, USA, Finland, Italy
●​ Examples:
○​ Rolex watches from Switzerland are highly valued due to the country's reputation for precision.
○​ Brands like Sony and Panasonic benefit from Japan's reputation for technological innovation and reliability.
2. Challenges:
●​ In the globalized economy, products may be produced in multiple countries, making it difficult to define COO.
●​ Companies must establish clear branding strategies to manage negative COO perceptions when expanding into
international markets.
●​ Example: Hyundai overcame negative COO perceptions in U.S & Europe markets by offering a 10-year/100,000-mile
warranty, emphasizing reliability and affordability, building U.S. and European plants, and designing models like the
Sonata with European appeal. It became a quality-focused brand, competing with Toyota and Honda.
3. Global Brands: typically focus on unified marketing strategies with some local adaptations → Builds strong brand equity
and enhances customer loyalty
Example:
●​ Starbucks: While maintaining its core brand identity, Starbucks adapts its menu to include local flavors, such as
offering green tea lattes in Asia.
 ●​ Nike maintains its iconic “swoosh” logo worldwide but tailors advertising campaigns to fit local cultures, such as
featuring local sports stars.

PRICING DECISIONS (CHAP 11,12 TRONG SÁCH)

CHAP 11: Pricing Decisions
II. PRICE STRATEGIES:
1.​ Skimming the market
Market skimming involves setting a high price for a distinctive product to maximize profit from a small, high-income market.
Once this market is saturated, the price is gradually lowered to attract broader customer segments. This strategy is often
used when the product has temporary advantages, limited production capacity, or uncertain long-term prospects in the
market.

Example: Louis Vuitton: Successfully using premium prices. Louis Vuitton has opened its 46th store in Japan, where the
combination of its status-symbol name and high prices appeals to a growing market segment of young, educated single
women still living with their parents. They splurge on products with cachet while cutting costs on other items. Louis Vuitton
sells more than twice as many handbags in Japan as in all of Europe. Maintaining high prices that support their positions as
status symbols, Vuitton, Chanel, and Hermes do well while the overall market for luxury goods in Japan has been falling
since 1996.
2.​ Penetration pricing
This strategy involves setting a low price to quickly capture a mass market, with a focus on value rather than cost. It
assumes that high sales volumes will reduce costs, leading to profitability.​
Example: Microsoft in China: Pricing to prevent piracy. Microsoft was frustrated that 95% of the installations of its Office
software in China were pirated. In a 10-month trial in China, it lowered its price to $29. Sales increased more than 800%.
Walmart: Maintains very low prices to attract and retain a large number of customers.
3.​ Sliding Down the Demand Curve
This is a variation of skimming pricing, where prices are reduced more quickly and significantly to deter potential competition.
The goal is to recover development costs while establishing a strong market position.​
Example: Tundra by Toyota: Success in using an incentive. In the US market, Toyota has been able to increase its market
share for automobiles and small pickups without using the large incentives frequently offered by GM, Ford, and Chrysler. In
2006, Toyota began manufacturing the Tundra full-size pickup truck in a large new facility in Texas, hoping to gain a sizeable
share of the market for this type of vehicle. American buyers of full-size pickup trucks are very brand-loyal, and sales of the
Tundra were initially substantially lower than desired. In June 2007, Toyota began offering incentives, including no-interest
loans, valued at $5,083 per vehicle. Sales for the Tundra more than doubled in June, putting sales back on track, while sales
of trucks by GM, Ford, and Chrysler all fell sharply.
4.​ Preemptive Pricing
Prices are set very low to prevent competitors from entering the market, sometimes even below total cost temporarily. The
strategy aims for long-term market dominance by leveraging cost reductions from increased volume.​
Example: Volkswagen in the US: A problem in failing to meet price competition. In the mid-2000s, with the weak dollar
failing to adequately cover high euro prices for labor and parts in Germany, Volkswagen AG adopted a strategy of reducing
discounts on cars being sold in the United States. Their US sales fell 30% in the first two months of 2004, and VW then
resumed offering competitive discounts.
5.​ Extinction Pricing
This strategy seeks to drive existing competitors out of the market by setting prices extremely low. Often used by large,
low-cost producers, it can harm smaller firms and slow economic growth in developing markets.​
Example:
Walmart in Germany: Two successes in using low-price strategies. Walmart attempted to use its low-cost strategy in
Germany but failed due to unfavorable competitive conditions and different customer preferences.
6.​ Companion Products: Captive or “Razors and Blades” Pricing
This strategy involves selling a primary product at a low price (or even at a loss) and generating profits through the sale of
complementary items that the main product requires. Known as the “razors and blades” model, it attracts customers with a
low upfront cost for the main product, but ensures continued revenue from the sale of high-margin companion products. The
idea is that once consumers purchase the primary item, they are "locked in" to buying the necessary complementary items,
which are often sold at premium prices.
Example: Rolls-Royce and Gen eral Electric both sell jet engines worldwide at low prices, and then make much of their
profits by selling spare parts and services at high prices. Pratt & Whitney is challenging this marketing model by selling
parts for the GE/Snecma engine, used on the Boeing 737, at a lower price than GE/Snecma itself does. Hewlett-Packard,
and several other producers of printers, sell their printers at low prices and replacement ink cartridges at a high price. Kodak
is now offering a relatively high-priced Kodak Easyshare printer for which the replacement cartridges cost relatively little
(Gapper, 2007)
7.​ Cost-Plus Pricing (Markup Pricing)
Cost-plus pricing, also known as markup pricing, is a pricing strategy where the selling price of a product is determined by
adding a fixed percentage (markup) to the cost of goods sold (COGS). The formula for this strategy is:

COGS (Cost of Goods Sold): This includes all the direct costs involved in producing or purchasing the product,
such as raw materials, labor, and overhead costs.
a% (Markup Percentage): This is the percentage added to the COGS to cover indirect costs (like marketing and
administrative expenses) and to ensure a profit margin.
Advantages:
●​ Easy and fast calculation: Simple to compute, making it a straightforward method for setting prices.
●​ Inclusive of additional costs: Any costs incurred during the sales process are automatically included in the final price
through the markup percentage.
Disadvantages:
●​ Inflexibility: Not suitable for products that experience frequent price fluctuations due to changes in market supply and
demand.
●​ Limited application: Best used for products with stable prices or items that must be sold quickly after production.
Example:
Imagine a company manufactures a notebook. The cost of producing each notebook (COGS) is $10. The company wants to
add a markup of 20% to ensure profitability. Using the cost-plus pricing formula:

Thus, the notebook will be sold at $12. This covers the production cost and includes a profit margin for the company.
8.​ Break-Even Analysis and Target Profit Pricing
a)​ Break-Even Analysis
The break-even analysis helps a business determine the number of units it needs to sell at a specific price to cover all its
costs (both fixed and variable). Once this volume is reached, any additional units sold contribute to profit.

●​ BEV (Break-Even Volume): The number of units that need to be sold to cover all fixed and variable costs.
●​ FC (Fixed Costs): Costs that do not change with the level of production (e.g., rent, salaries).
●​ P (Price): The selling price per unit.
●​ VC (Variable Costs): Costs that vary directly with the production level (e.g., raw materials)
Example: Suppose a company has fixed costs of $20,000, the selling price per unit is $100, and the variable cost per unit is
$60.

Thus, the company needs to sell 500 units to break even. After selling these 500 units, any additional sales will start
generating profit.
b)​ Target profit pricing
This approach helps in determining the price at which a company needs to sell its products to achieve a specific profit goal.
The target price is calculated by adding the unit cost of production to the required profit per unit, which is derived from
dividing the target profit by the expected number of units to be sold.
Example: Suppose a company produces a product with a unit cost of $50. The company aims for a target profit of $10,000,
expecting to sell 1,000 units.

Thus, the target price per unit should be $60 to achieve the desired profit.
9. Perception-Based Pricing
Perception-based pricing is a strategy where the price of a product is determined not only by its cost of goods sold (COGS)
but also by the customer's perceived value of the product. The formula can be expressed as:

Key Principles:
●​ Customer Interest: If the customer shows high interest or perceives the product as valuable, the seller may set a
higher price. Conversely, if customer interest is low, the seller may opt to charge closer to the original cost or a lower
markup to encourage sales.
●​ Quality Perception: Products perceived as high-quality or premium tend to justify higher prices. This perception can
stem from brand reputation, exclusivity, or added features.
Example:
Imagine a company produces a luxury leather bag with a COGS of $100. If the brand is known for high quality and
exclusivity, customers might perceive this product as worth much more due to its premium brand image and craftsmanship.
The company might price it at $300 based on the perceived value. However, if a similar leather bag is produced by a
lesser-known brand with the same COGS of $100, it may only be able to sell it at $150 due to a lower perception of value by
customers. In essence, perception-based pricing allows businesses to leverage their brand, quality, and customer
expectations to optimize profitability.
10. Competition-based pricing
Competition-based pricing is a strategy where a company sets the price of its products or services based on the prices
charged by competitors in the market. This approach focuses less on the cost of production or consumer demand and more
on understanding and aligning with the pricing strategies of other firms. It is commonly used in industries where products are
relatively similar and customers can easily switch between brands.

Key Principles:
●​ Market Analysis: Companies analyze competitors’ prices, strategies, and market positioning to determine their own
pricing. The goal is to remain competitive and avoid losing market share while ensuring profitability.
●​ Applicable Industries: Often applied in the Fast-Moving Consumer Goods (FMCG) sector, where products like bottled
water, snacks, or toiletries are sold. These products typically have low differentiation, making competition-based
pricing highly effective.
Example:
Consider a company selling bottled water. If competitors are pricing their products at $1 per bottle, the company may set its
price at $0.95 to attract cost-sensitive customers or match the $1 price to maintain a premium brand perception. In some
cases, they might even price slightly higher (e.g., $1.05) if they offer perceived added value, like eco-friendly packaging or
enhanced water quality. In this scenario, the company’s decision on whether to price higher, lower, or equal to competitors
depends on its brand positioning, cost structure, and target market strategy.
II. PRICE ESCALATION
Price Escalation refers to the phenomenon where the selling price of a product or service increases significantly when
exported compared to its price in the domestic market of the producing country. This occurs due to additional costs
associated with exporting, such as transportation, tariffs, taxes, and other factors when a product is moved from the domestic
to the international market.

Causes of Price Escalation:

1. Cost
Export costs refer to the total expenses incurred when a business sells its products or services in international markets.
These costs include:
●​ Shipping costs: Expenses for transporting goods from the exporting country to the importing country.
●​ Insurance costs: Insurance fees to protect goods during transit.
●​ Financing costs: Includes interest payments and advance capital costs for fulfilling large export orders.
●​ Packing costs: Special packaging to meet international shipping requirements.
●​ Tariffs: Import taxes imposed by countries on foreign goods.
●​ Longer distribution channels: Additional costs when using intermediaries and longer distribution channels to reach
end consumers.
 ●​ Higher intermediary margins: Intermediaries often demand higher margins compared to the domestic market.
●​ Special taxes and administrative costs: These include special taxes, import/export licenses, and other administrative
fees.
●​ Exchange rate fluctuations: Affect the final selling price when converting currencies between countries.
Example : A company manufactures coffee machines in the United States, with a production cost of $100 per unit. When
exporting to Brazil, the company faces the following costs:
1.​ Shipping: $20 per machine for sea freight from the U.S. to Brazil.
2.​ Insurance: $5 for insuring the goods during transit.
3.​ Import Tariffs: Brazil applies a 30% import tariff on the product’s value, amounting to $30.
4.​ Special packing costs: $3 to ensure the coffee machines are well-protected during long-distance shipping.
5.​ Intermediary and distribution costs: $10 for local intermediaries to distribute the product to retail stores.
6.​ Exchange rate fluctuations: If the USD/Brazilian Real exchange rate changes unfavorably, the price may increase by
$5 due to the devaluation of the local currency.

The total export cost per coffee machine would be:

Therefore, when selling the product in Brazil, the minimum selling price of the coffee machine would need to be $173 or
higher to cover all costs and ensure profitability.
2. Taxes, Tariffs, and Administrative Costs

●​ Tariffs may be levied for the purpose of protecting a market or for increasing government revenue.
●​ Specific duty is a flat charge per physical unit imported, such as 15 cents per bushel of rye.
●​ Ad valorem duties are levied as a percentage of the value of the goods imported, such as 20 percent of the value of
imported watches.
●​ Compound duties include both a specific and an ad valorem charge, such as $1 per camera plus 10 percent of its
value
●​ Fees for import certificates or for other administrative processing can assume such levels that they are, in fact,
import taxes
●​ Export and import licenses, other documents, and the physical arrangements for getting the product from port of
entry to the buyer’s location mean additional costs.
Example:
A camera manufacturer in Japan exports its products to the United States:
1.​ Specific Duty: The U.S. imposes a flat tax of $1 per camera.
2.​ Ad Valorem Duty: An additional 10% of the camera's value. If a camera is priced at $200, the tax is $20.
3.​ Administrative Costs: Fees for import certificates and customs procedures amount to $5 per unit.
Total additional costs:
Result:​
The camera, originally priced at $200 in Japan, ends up costing $226 for consumers in the U.S. due to these added costs.
3. Inflation and Deflation
a.​ Inflation (Lạm phát)
Definition and Impact:​
Inflation refers to the increase in prices of goods and services over time due to rising production costs and raw material
prices. In the context of exporting, inflation can drive up the prices of products in foreign markets because of increased
production expenses.
●​ When a country experiences inflation, businesses are forced to raise prices to offset higher production costs. This
can make their products less competitive in international markets, especially if competitors from other countries are
not facing similar inflationary pressures.
●​ Additionally, if payment terms are delayed for several months or involve long-term contracts, companies must factor
inflation into their pricing to protect their profit margins.
Example:​
A company in Germany manufactures air conditioning units for export to Turkey. Due to inflation in Germany, the costs of
raw materials and labor have increased. Previously, the export price was $500 per unit, but with a 10% increase in
production costs, the price has to be adjusted to $550 to maintain profitability.
b.​ Deflation
Definition and Impact:​
Deflation is the decrease in prices of goods and services, usually caused by an excess supply over demand or economic
downturns. This forces businesses to lower prices to stimulate demand.
●​ In the context of exports, companies might need to reduce their product prices to stay competitive and attract foreign
buyers. While deflation can boost market share, it may compress profit margins due to lower prices.
●​ This is especially relevant in highly competitive markets or during periods of weak consumer demand.
Example:​
A Japanese company exports flat-screen TVs to the United States. Previously, a 32-inch TV was sold at $1,000, but due to
deflation and declining demand in Japan, the company reduces the price to $800 to stay competitive in the U.S. market. This
strategy helps boost sales but may impact short-term profitability.
4. Exchange Rate Fluctuations​
Exchange rate fluctuations refer to changes in the value of one currency relative to another. These changes can have a
significant impact on the pricing strategies of businesses engaged in international trade. Given the volatility of exchange
rates, companies need to carefully assess how these fluctuations can affect their costs, revenues, and overall
competitiveness in foreign markets.
a.​ Complications in Setting Prices:​
When exchange rates are unstable, it becomes challenging for exporters to set consistent prices. This
unpredictability can lead to either unexpected losses or gains, depending on how exchange rates shift after prices
are determined. It requires careful planning to avoid adverse financial impacts.
b.​ Impact of a Weak Home-Country Currency:​
When a company’s home currency is weak compared to the foreign currency, this situation can be advantageous for
exporters:
●​ Cutting export prices to increase market share: A weaker currency allows companies to lower prices without
sacrificing profit margins, making their products more competitive abroad.
●​ Maintaining current prices for higher profit margins: By keeping prices stable, firms can earn greater profits when
converting foreign revenue back into their weaker home currency.
●​ Windfall gains: Favorable exchange rates may result in unexpected revenue increases when foreign earnings are
repatriated.
c.​ Impact of a Strong Home-Country Currency:​
A strong home currency can create unfavorable conditions for exporters:
●​ Reduced overseas revenue: When the home currency strengthens, the value of foreign sales decreases upon
conversion, which can hurt profitability.
●​ Decreased competitiveness: Products become more expensive in international markets, potentially leading to a loss
in market share if consumers switch to cheaper alternatives from other countries.
d.​ Flexible Cost-Plus Pricing Strategy:​
To mitigate the negative effects of exchange rate fluctuations, companies often use a flexible cost-plus pricing
approach. This involves adjusting prices according to changes in exchange rates to safeguard profitability and
maintain market share. This strategy allows companies to react quickly to exchange rate movements, ensuring they
stay competitive without sacrificing margins.
Example: Consider a Japanese electronics company that exports high-end cameras to both the U.S. and the Eurozone.
●​ The original export price of a camera is ¥100,000 (around $900 when the exchange rate is 1 USD = 110 JPY).
●​ If the Japanese Yen weakens to 1 USD = 120 JPY, the company can now afford to reduce the price in the U.S. to
$850 while still earning the same amount in Yen (¥102,000). This makes the product more attractive in the U.S.
market.
●​ Conversely, if the Yen strengthens to 1 USD = 100 JPY, the same camera priced at $900 will now only convert to
¥90,000, reducing the company’s revenue. To maintain profitability, the company might need to raise the U.S. price
to $1,000 to achieve the original ¥100,000 revenue.
By adjusting prices based on exchange rate movements, the company can protect its profits while remaining competitive in
different markets.
5. Currency Values
Fluctuations in currency values can significantly impact how products are priced in international markets, leading to price
escalation. A strong or weak home currency influences consumer demand by making exports either more expensive or more
affordable abroad.
Impact of a Strong Currency:
●​ A strong U.S. dollar means foreign buyers need more of their local currency to buy U.S. goods, leading to price
resistance. This can reduce demand for U.S. exports as they become less competitive.
Impact of a Weak Currency:
●​ A weak dollar, on the other hand, makes U.S. products cheaper for foreign consumers, boosting demand.
Companies may use cost-plus pricing to take advantage of favorable exchange rates while maintaining profitability.
Challenges in Pricing:​
Setting prices in foreign markets is complicated by factors like demographics, cultural attitudes, and economic conditions.
Limited data in developing markets makes it hard to gauge consumer response, especially when currency fluctuations are
involved.
Example:​
Suppose a U.S. company exports electronic devices to Japan. If the U.S. dollar strengthens, a device priced at $500 in the
U.S. may cost significantly more in Japanese Yen, leading to reduced demand. Conversely, if the dollar weakens, the same
product may become more affordable in Japan, increasing sales. Companies must adjust their pricing strategies to account
for these shifts to remain competitive and avoid price escalation that could deter foreign consumers.
6. Middleman and Transportation Costs in International Marketing
a.​ Middleman Costs:
●​ Distribution channels are often longer in many countries compared to the U.S., resulting in higher middleman
margins. These extended channels add extra costs before products reach consumers.
●​ In underdeveloped markets, unexpected expenses arise due to poor infrastructure, requiring additional handling or
storage.
●​ Higher financing costs may occur when dealing with underfunded intermediaries needing upfront payments.
●​ Thorough market research is crucial to assess local middleman fees and navigate distribution complexities.
b.​ Transportation Costs:
●​ Vary significantly across markets due to infrastructure differences, tariffs, and logistics, often requiring different
export prices.
●​ Differential pricing is used to account for demand elasticity and market separation. Higher transportation or re-export
costs are necessary to prevent arbitrage between low- and high-priced markets.
Example: A German manufacturer sells the Volkswagen Golf at $8,290 in Finland, $11,040 in Germany, and $13,040 in the
UK. These differences are due to varying transportation costs, taxes, and market conditions, even within the EU.
c.​ Gray Market Impact:
●​ Gray markets occur when products are resold from low-price to high-price markets, eroding authorized distributors'
profits. This is common in industries like pharmaceuticals, where price controls differ across countries.
Example Apple’s iPhone often faces gray market issues due to price differences between countries. For example: In the
U.S., an iPhone costs $1,000, In India, due to import taxes, it’s priced around $1,400. Buyers purchase iPhones in the U.S.
and resell them in India for $1,200, undercutting Apple’s official prices. This harms Apple’s authorized sales channels and
disrupts its pricing strategy, especially in markets with significant tax-induced price differences.
III. APPROACHES TO REDUCING PRICE ESCALATION
To combat price escalation, exporters can adopt several strategies:
1. Lowering Cost of Goods
●​ Reducing production costs can help exporters set lower initial prices. This may involve sourcing cheaper raw
materials, optimizing manufacturing processes, or increasing efficiency to reduce factory costs. By lowering the base
cost, the multiplier effect from added export costs (like tariffs and logistics) becomes less impactful.
2. Lowering Tariffs
●​ Exporters can work to reduce tariff costs by exploring favorable trade agreements or classifying products under
categories with lower duties. Another option is to negotiate with customs authorities to change duty classifications,
which can result in lower tariffs.
3. Lowering Distribution Costs
●​ Shortening the distribution chain by using fewer intermediaries can reduce costs. Exporters can also explore more
efficient logistics solutions or partner with local distributors who already have established networks.
4. Using Foreign Trade Zones (FTZs)
●​ Exporters can use Foreign Trade Zones to defer, reduce, or eliminate customs duties on imported goods. By storing
goods in FTZs, companies can avoid duties until the products enter the market, or they may not have to pay duties at
all if the goods are re-exported.
5. Dumping
●​ Dumping involves selling products in a foreign market at prices below domestic market levels or even below
production costs to gain market share quickly. While it can help reduce inventory and increase market penetration,
dumping can lead to legal disputes and anti-dumping tariffs from the target country.
6. Additional Strategies
Terpstra (1988) also suggests:
●​ Shipping modified or unassembled products: This reduces transportation and duty costs. For example, shipping
unassembled kits rather than fully built products can lower duties and shipping fees.
●​ Lowering export factory prices: Reducing the initial factory price decreases the overall multiplier effect of
subsequent markups.
●​ Producing within the export market: Setting up manufacturing facilities or forming joint ventures locally can
eliminate many export-related costs altogether.
IV. TRANSFER PRICING
Transfer pricing refers to the pricing of goods, services, or intangible assets exchanged between divisions, subsidiaries, or
affiliated companies within the same organization but located in different jurisdictions. This is crucial for companies operating
globally, as it impacts taxes, tariffs, and profitability.
Why Transfer Pricing Matters:
●​ Transfer pricing is essential when a company decentralizes its operations, with each division functioning as a profit
center. It ensures fair pricing between units to optimize profits, align tax obligations, and comply with legal
requirements.
●​ It also plays a strategic role in managing cash flow, controlling divisional performance, and optimizing tax liabilities by
shifting profits to jurisdictions with lower tax rates.
Methods of Setting Transfer Prices
1.​ Cost-Based Transfer Pricing:
○​ Pricing is set based on the production cost plus a markup. This approach is often used to meet regulatory
requirements or to avoid accusations of tax evasion.
○​ Useful when the focus is on covering costs and achieving a reasonable profit margin rather than maximizing
profit.
2.​ Market-Based Transfer Pricing:
○​ Prices are set according to market conditions, similar to prices charged to independent customers. This
method is ideal for competitive environments where subsidiaries operate independently.
○​ Helps align transfer prices with arm’s length standards, reducing the risk of tax disputes.
3.​ Negotiated Transfer Pricing:
○​ Prices are set through negotiations between the buying and selling units within the company. This approach
offers flexibility but may lead to internal conflicts if not managed well.
○​ Often used when divisions operate with a high degree of autonomy.
Factors Influencing Transfer Pricing
1.​ Competitive Market Prices:
○​ Transfer prices may be influenced by competitor pricing, market demand, and overall market conditions.
2.​ Cost Structures:
○​ Production, distribution, and regulatory costs in different countries impact the transfer price. For instance,
tariffs and taxes in the importing country may necessitate adjustments.
3.​ Legal and Regulatory Considerations:
○​ Tax authorities require that transfer prices align with the arm's length principle, meaning prices should be
comparable to those set between independent entities.
○​ Non-compliance with transfer pricing regulations can result in fines, penalties, and legal disputes.
Example of Transfer Pricing
Scenario:​
A U.S.-based multinational company manufactures electronic components in its factory in Mexico and sells them to its
subsidiary in Germany.
●​ Cost-Based Approach: The U.S. division sets the transfer price at $100 per unit (production cost of $80 plus a $20
markup).
●​ Market-Based Approach: The German subsidiary purchases similar components from external suppliers at $150
per unit, so the transfer price is set at the same market rate.
●​ Negotiated Approach: Both the U.S. and German divisions negotiate a transfer price of $120 per unit to balance
profitability and meet tax compliance.
Outcome:
●​ By using a market-based approach, the company avoids potential tax issues, as the transfer price aligns with market
rates.
●​ If the company uses a cost-based approach to shift profits to its Mexican factory (where taxes are lower), it may face
scrutiny from German tax authorities.
Importance of Transfer Pricing Compliance
Failure to properly set transfer prices can lead to significant tax penalties. For example:
●​ GlaxoSmithKline had to pay $3.4 billion to the IRS in 2006 for inflating transfer prices to shift profits to low-tax
jurisdictions.
●​ Nissan paid £37 million to the UK tax authority for allegedly shifting profits out of the country.
​ V. COUNTERTRADE AND ITS TYPES EXPLAINED
Countertrade is a broad term referring to various trade agreements where goods, services, or technology are exchanged
instead of using traditional monetary payments. It is commonly used by countries facing currency shortages or aiming to
boost economic development. Countertrade involves linking sales contracts with purchase contracts, making each party both
a buyer and seller. This type of trade is often mandated by governments rather than private companies.
Below are the main forms of countertrade, along with definitions and real-world examples.
1. Barter
●​ Definition: A simple, direct exchange of goods or services between two parties without using money. It involves a
one-to-one exchange where the value of the goods traded is agreed upon.
 ●​ Example: In 2002, Daimler-Chrysler and Toyota accepted grain as payment for vehicles in Argentina due to cash
shortages in the local banking system. The grain was then sold to other companies for cash.
2. Counterpurchase (Parallel Trading)
●​ Definition: An arrangement where an exporter sells goods to an importer for cash or credit but, in return, agrees to
purchase unrelated goods from the importer or another party within the country. This helps countries conserve
foreign exchange reserves.
●​ Example: In the 1970s, Volkswagen agreed to buy coal, oil, and machinery from East Germany in exchange for
selling 10,000 cars. This allowed the company to enter a new market while sourcing cheaper materials.
●​ Bảng này so sánh 2 hình thức buôn bán đối lưu là Barter với counterpurchase thôi chứ hỏng gì

3. Offset
●​ Definition: Typically used in large government procurements (e.g., defense or aerospace), offsets require the seller
to invest in the importing country by sourcing components locally, transferring technology, or supporting exports from
that country.
●​ Characteristics:
○​ Non-contractual and extends over a longer period.
○​ No strict penalties for non-performance; agreements usually require fulfilling 20-50% of the supplier's
contract value.
●​ Example: Boeing formed a joint venture with Russia's VSMPO-Avisma to source titanium components, which led to
Aeroflot purchasing 20 Boeing 787s.
4. Compensation Trading (Buyback)
●​ Definition: This involves two parallel contracts. The first contract is where a supplier agrees to build a facility, supply
machinery, or provide technical expertise. In the second contract, the supplier receives payment through the output
of the facility over a period, usually up to 20 years.
 ●​ Example: Levi Strauss provided equipment and technology to a jeans factory in Hungary in exchange for a portion
of the jeans produced, which Levi then exported to Western Europe.
5. Switch Trading (Triangular Trade or Trade and Swap)
●​ Definition: In this arrangement, a third party (often a switch trader) intervenes when one party does not want the
goods received in a countertrade deal. The switch trader helps convert these goods into more desirable items or
cash.
●​ Example: A German firm traded machine tools worth €1 million to Brazil for coffee. Since the firm did not need
coffee, a switch trader sold it to a Canadian company for €925,000, allowing the German firm to obtain hard
currency.
Why Importers Use Countertrade
1.​ Lack of Foreign Exchange: Many developing countries use countertrade to bypass currency restrictions.
2.​ Technology Transfer: Countertrade agreements often involve the transfer of technology or know-how to help the
importing country build its industries.
3.​ Economic Development: Governments use countertrade to stimulate domestic employment and economic growth.
4.​ Market Entry: Helps exporters enter markets that are otherwise restricted due to currency controls or economic
sanctions.
Benefits to Exporters
●​ Market Access: Allows companies to access markets with restricted funds or blocked currencies.
●​ Protection Against Currency Devaluation: Countertrade protects exporters from exchange rate fluctuations by
securing payment in goods or services.
●​ Building Relationships: Enhances long-term customer relationships by providing flexible payment options.
●​ Competitive Advantage: Offers a unique selling point that can differentiate a company in competitive markets.
●​ Access to Raw Materials: Provides access to essential raw materials that might be scarce or expensive in the
exporter’s home country.
VI. PRICE QUOTATIONS - Terms of the Sale
1.​ Ex-Works (EXW - E-Term)​
Definition: The seller makes the goods available at their premises (such as a factory or warehouse), and
the seller's responsibility ends once the goods are placed at that location. The buyer bears all costs and
risks from there to the final destination.​
Calculation Formula:​
EXW Price = Production Cost + Profit.​
Example: A company in Vietnam sells machinery to a customer in Japan under EXW terms. The buyer is
responsible for all transportation costs from the company’s warehouse in Vietnam to Japan.
2.​ FCA (Free Carrier)​
Definition: The seller is responsible for delivering the goods to the carrier designated by the buyer at the agreed
location. After that, the risk shifts to the buyer.​
Example: A shipment of coffee from Brazil is delivered to the carrier at the port of Rio de Janeiro. Once delivered,
the responsibility shifts to the buyer.
3.​ FAS (Free Alongside Ship)​
Definition: The seller is responsible for delivering the goods alongside the ship at the port of export. The buyer
bears all costs and risks from that point.​
Example: A U.S. company sells soybeans to China and delivers them alongside the ship at the port of Los Angeles.
The buyer is responsible for shipping costs from the port.
4.​ FOB (Free On Board)​
Definition: The seller is responsible for loading the goods onto the ship. Once the goods are on board, all risks
transfer to the buyer.​
Example: An exporter in India sells seafood under FOB terms at the port of Chennai. The buyer in Canada takes
responsibility once the goods are loaded onto the vessel.
5.​ CFR (Cost and Freight)​
Definition: The seller covers the transportation costs to the destination port but is not responsible for loss or damage
after the goods are loaded onto the ship.​
Example: Exporting rice from Vietnam to Malaysia under CFR terms. The seller pays for the freight but the buyer
bears the risk from the departure port.
6.​ CIF (Cost, Insurance, and Freight)​
Definition: Similar to CFR, but the seller also purchases insurance for the goods. The risk still transfers to the buyer
 once the goods are loaded onto the ship.​

CIF Calculation Formula:

Where:
●​ C: FAS price
●​ F: Total freight cost
●​ N: Number of units shipped
●​ R: Insurance rate (per $100).​
Example: Exporting apples from Canada to France under CIF terms. The seller covers transportation and insurance
costs to the port of Le Havre.
7.​ Ex Dock​
Definition: The seller is responsible for transporting the goods to the dock at the importing country’s port and paying
import duties. The risk transfers to the buyer once the goods are delivered at the dock.​
Example: A Japanese company exports cars under Ex Dock terms to the port of Los Angeles. The seller handles
transportation to the dock and covers all import duties.
8.​ Export Price Escalation​
Definition: This refers to the phenomenon where the final selling price increases when goods are traded across
borders, due to additional costs like transportation, tariffs, and distribution fees.​
Specific Example: A car with an ex-works price of $20,000 in the U.S. may have a CIF price of $35,000 when
shipped to Japan due to transportation and insurance costs, leading to a final retail price of $45,000 after adding
taxes and other costs.
DISTRIBUTION DECISIONS (CHAPTER 14 TRONG SÁCH)
1.​ CHANNEL OF DISTRIBUTION STRUCTURES
a.​ Distribution channel
●​ Physical distribution: is the physical flow of goods through channels (transportation, warehousing, and distribution
systems) (Zara’s fast-fashion model uses efficient logistics to restock stores twice a week, responding quickly to
fashion trends)
●​ Channel of distribution: A channel of distribution is “an organized network of agencies and institutions that, in
combination, perform all the activities required to link producers with users to accomplish the marketing task.”
○​ Direct Channels: The producer sells directly to the end consumer, often through e-commerce or
company-owned stores. This approach is common for large companies or high-value products.
○​ Indirect Channels: The producer uses intermediaries to distribute goods. Common intermediaries include:
■​ Export Agents/Brokers: Assist in finding buyers and handling transactions.
■​ Wholesalers: Purchase goods in bulk and sell to retailers.
■​ Retailers: Sell goods directly to consumers.
■​ Distributors: Act as the producer's representative in foreign markets, handling storage, marketing,
and sales.
Example: Coca cola
Physical Distribution:​
Coca-Cola produces syrup at central factories in the U.S. The syrup is then transported by sea or air to bottling
plants in countries like Vietnam, India, or Brazil. At these plants, the product is mixed, packaged, and stored in
warehouses before being distributed to retailers.
●​ Transportation: The syrup is shipped by sea to optimize costs.
●​ Warehousing: Local warehouses ensure goods are ready to meet market demand.
●​ Inventory Management: Inventory levels at local warehouses are monitored to avoid shortages or overstocking.
Channel of Distribution:​
Coca-Cola uses indirect distribution channels. The bottling plants in each country handle the distribution of
beverages to retailers, supermarkets, cafes, and vending machines. In Vietnam, products are distributed through
large distributors like DKSH or smaller retail agents.
●​ Intermediary: Bottling plant → Distributor → Retailer → Consumer.
Example: Apple
Physical Distribution:​
Apple manufactures components and assembles iPhones in China (Foxconn). The finished products are then transported by
air to global distribution hubs in the U.S., Europe, and Southeast Asia.
●​ Transportation: Air transport is used to ensure speed and reduce delivery times.
●​ Warehousing: Warehouses in Singapore (Asia), the Netherlands (Europe), and the U.S. manage inventory close to
the consumption market.
 ●​ Order Processing: Orders placed via the website or retail stores are fulfilled from the nearest warehouse.
Channel of Distribution:​
Apple employs both direct and indirect channels:
●​ Direct: Apple sells directly via its website ([Link]) or Apple Stores in major cities.
●​ Indirect: Apple works with retailers such as Best Buy (U.S.), FPT Shop (Vietnam), or carriers like Viettel and
Mobifone to distribute its products to consumers.
Example: Starbuck
Physical Distribution: Starbucks imports coffee beans from farms in Ethiopia, Vietnam, and Brazil. These beans are
shipped to roasting facilities in the U.S. or Europe and then transported to Starbucks stores worldwide.
●​ Transportation: Coffee beans are shipped by sea from Vietnam to the U.S. to reduce costs.
●​ Warehousing: Coffee beans are stored in warehouses near major markets such as the U.S., Europe, or East Asia.
Channel of Distribution: Starbucks uses direct distribution channels, selling products through its own store network
globally. However, Starbucks also has indirect channels, partnering with supermarkets or retailers (e.g., selling packaged
coffee at Walmart or VinMart).
b.​ Channel objectives and utility
Marketing channels exist to create utility for customers:
●​ Place utility: availability of a product or service in a location that is convenient to a potential customer (Nestlé uses
extensive distribution networks to make products like Nescafé available even in remote rural markets)
●​ Time utility: availability of a product or service when desired by a customer (Seasonal goods like winter clothing
distributed before peak seasons by brands like H&M)
●​ Form utility: availability of the product processed, prepared, in proper condition and/or ready to use (McDonald’s
introduces menu items specific to regions, such as McSpicy Paneer in India)
●​ Information utility: availability of answers to questions and general communication about useful product features and
benefits (Samsung’s in-store displays educate buyers about features of its latest Galaxy smartphones)
c.​ Channel management: Building a network of intermediaries involves identifying potential intermediaries,
selecting those who meet the company's requirements, and establishing working relationships with them
●​ Locating Middlemen: refers to the process of identifying intermediaries—such as agents, distributors, wholesalers, or
retailers—that can facilitate the distribution and sale of a company’s products in a foreign market. Middlemen act as
the bridge between the producer and the final consumer, often providing market access, local expertise, and
logistical support
Coca-Cola's Approach in India
When Coca-Cola re-entered the Indian market in the 1990s, it relied on local distributors and middlemen to
establish its vast network. The company focused on:
○​ Locating middlemen with established distribution channels in urban and rural areas.
○​ Partnering with regional bottlers to ensure a steady supply of beverages.
○​ Selecting intermediaries who had deep knowledge of local preferences and market conditions.
●​ Selecting Middlemen: involves choosing the most suitable intermediaries (e.g., agents, distributors, wholesalers) to
facilitate the distribution of products in foreign markets. This step is critical because the chosen middlemen will
represent the company, influence the brand's success, and ensure products reach the target market efficiently
Coca-Cola in India:
Coca-Cola carefully selects bottling and distribution partners who have robust logistics systems and local market
access. In India, Coca-Cola partners with local companies to manage the distribution of its products to even remote
areas
○​ Screening: Screening is the process of evaluating potential middlemen (intermediaries) to determine their
suitability to represent a company in a foreign market. This involves a thorough assessment of each
candidate's capabilities, resources, reputation, and alignment with the company's objectives and values
L'Oréal's Screening in Asia: When expanding into Asian markets, L'Oréal meticulously screened potential
distributors. They evaluated candidates based on their understanding of the cosmetics industry, retail
network strength, and ability to execute marketing campaigns. This thorough screening helped L'Oréal
partner with distributors who could effectively promote premium beauty brands in diverse markets like China
and India.
○​ The Agreement:Once suitable middlemen have been selected through screening, "The Agreement" refers to
the formal contract that outlines the terms and conditions governing the relationship between the company
and the intermediary
Starbucks' Agreements with Middle Eastern Licensees: Starbucks enters into detailed agreements with
regional partners in the Middle East, like Alshaya Group. The agreement specifies that Alshaya will operate
Starbucks stores under strict brand guidelines, ensuring consistency with global standards. The contract
covers store operations, employee training, supply chain requirements, and marketing strategies. It also
 includes clauses on maintaining Starbucks' ethical sourcing standards and corporate social responsibility
initiatives.
●​ Motivating Middlemen: This refers to the strategies used to encourage intermediaries to perform effectively and stay
committed to the company’s objectives (Apple motivates its retail partners by offering intensive training programs
through the Apple Authorized Reseller Program, ensuring their staff can effectively sell and support Apple products.)
●​ Controlling Middlemen: Monitoring and managing the performance of middlemen to ensure they meet agreed-upon
standards and align with the company’s objectives (Unilever regularly reviews its distributors’ performance, ensuring
they adhere to its supply chain standards and meet sales targets in emerging markets.)
●​ Terminating Middlemen: Ending the relationship with an intermediary due to underperformance, breach of contract,
or strategic shifts (Coca-Cola terminated underperforming bottlers in India as part of its strategy to streamline its
supply chain and ensure consistent quality and availability.)
d.​ International Channel-of-Distribution Alternatives
●​ Agent middlemen: (Nike uses agents in specific emerging markets to connect with regional distributors or retailers)
○​ work on commission and arrange for sales in the foreign country but do not take title to the merchandise.
○​ By using agents, the manufacturer assumes trading risk but maintains the right to establish policy guidelines
and prices and to require its agents to provide sales records and customer information
●​ Merchant middlemen: Merchants purchase products from manufacturers and resell them for a profit (Costco acts as
a merchant middleman, purchasing goods directly from suppliers and selling them in bulk to consumers)
○​ take title to manufacturers’ goods and assume the trading risks, so they tend to be less controllable than
agent middlemen.
○​ provide a variety of import and export wholesaling functions involved in purchasing for their own account
and selling in other countries.
●​ Home-country middlemen: (Mitsubishi Corporation, a Japanese trading company, helps manufacturers export their
goods globally)
■​ Located in the manufacturer’s home country, providing marketing services from a domestic base
■​ Offers significant advantages for manufacturers with small international sales volumes
○​ Manufacturers’ Retail Stores: Retail outlets owned and operated by the manufacturer to sell products directly
to consumers in foreign markets (Apple Stores worldwide are owned by Apple, providing a consistent brand
experience)
■​ Ensure brand consistency and customer engagement.
■​ Requires significant investment but offers complete control over branding and pricing
○​ Global Retailers: Large retail chains operating in multiple countries that source and sell a wide variety of
products (Walmart acts as a global retailer, offering shelf space for international products in its stores)
■​ ​Offer manufacturers access to vast markets.
■​ Often demand competitive pricing and standardized packaging
○​ Export Management Companies: Specialized firms that handle export operations for manufacturers,
including market research, sales, and logistics (An EMC helps a local craft company in Vietnam export its
handmade baskets to European markets)
■​ Ideal for small and medium-sized businesses with limited resources.
■​ Charge fees or earn commissions based on sales
○​ Trading Companies: Large firms specializing in global trade, managing everything from sourcing to selling
products across borders (Sumitomo Corporation, a Japanese trading company, facilitates the trade of
metals, chemicals, and food products globally)
■​ Provide extensive market reach and logistical support.
■​ Often involved in bulk commodities and industrial goods
○​ Piggybacking: A smaller company uses the distribution network of a larger, established company to enter
foreign markets (A small beverage brand partners with PepsiCo to distribute its drinks using PepsiCo’s
established network)
■​ Reduces costs and speeds up market entry.
■​ Typically involves non-competing products.
○​ Manufacturer’s Export Agent: Independent agents specializing in export sales and marketing, working on
behalf of the manufacturer (An MEA may represent a small electronics firm to sell its products in Southeast
Asia.)
■​ Do not take ownership of goods but act as a representative in foreign markets.
■​ Paid through commissions
●​ Foreign-Country Middlemen: Intermediaries located in the target market who handle distribution and sales
(Carrefour, a large retailer in Europe, serves as a middleman for international food brands)
○​ control better the distribution process, manufacturers can choose to deal directly with intermediaries in
foreign markets
 ○​ They can leverage the advantages of shorter distribution channels and work with intermediaries who have
regular contact with the market
○​ Agents are intermediaries who act on behalf of the manufacturer to facilitate sales and market entry without
taking ownership of the goods. They are typically paid a commission based on the volume of sales they
generate (A wine producer in France might use an agent to promote and sell its wines to distributors in Asia)
/ Merchants are intermediaries who purchase goods from the manufacturer, take ownership of them, and
resell them to customers or other intermediaries (A merchant might buy electronics in bulk from a
manufacturer and sell them in retail outlets or online platforms)
○​ Manufacturer’s representatives and foreign distributors
e.​ Types of retail operations
●​ Department stores: Several departments under one roof, each representing a distinct merchandise line and staffed
with a limited number of salespeople. (E.g. Macy's (USA): Known for offering multiple departments, each focused on
categories such as apparel, cosmetics, and home goods.)
○​ Department stores are designed to offer a variety of product categories like clothing, furniture, and
electronics within a single location, segmented into different departments.
○​ These stores cater to customers looking for a wide range of products and a comprehensive shopping
experience in one place.
○​ Typically found in urban centers or large malls, they appeal to middle-to-upper-income consumers.
●​ Specialty Retailers: Narrowly focused and offer a relatively narrow merchandise mix aimed at a particular target
market (E.g. Sephora (France): A beauty retailer focusing on cosmetics, skincare, and fragrances, offering an
exclusive range of premium brands)
○​ These stores specialize in a single category or niche, offering curated product selections and expertise in
their field.
○​ The focus is on providing a high level of service and premium products tailored to the specific needs of a
particular audience.
●​ Supermarkets: Departmentalized, single-story retail establishments that offer a variety of food and nonfood items
(e.g. Tesco (UK): Operates as a supermarket chain providing a mix of food, beverages, and household goods)
○​ Supermarkets primarily focus on groceries but may also offer other household essentials like toiletries and
small electronics.
○​ Their layout is designed for self-service, making them highly efficient for bulk purchases.
○​ Supermarkets cater to daily or weekly needs and serve a broad demographic
●​ Convenience Stores: Same products as supermarkets, but the merchandise mix is limited to high-turnover
convenience and impulse products. (E.g. 7-Eleven (Japan/USA): Offers quick snacks, drinks, and ready-to-eat
meals for busy customers)
○​ Convenience stores are small-scale, quick-access outlets located in urban neighborhoods or near
transportation hubs.
○​ They stock essential items like snacks, beverages, and basic groceries, catering to on-the-go customers.
○​ Often open 24/7, their focus is on convenience over variety or bulk purchasing
●​ Discount Retailers: Emphasis on low prices (E.g. Dollar General (USA): Focuses on providing affordable household
goods and groceries)
○​ Discount retailers attract price-conscious shoppers by offering goods at lower prices than traditional retailers.
○​ They achieve cost savings through bulk purchasing, minimal store layouts, and lower operational costs.
○​ Products can include both branded and private-label items
●​ Hard Discounters: Limited assortment of goods—typically 1,000 to 3,000 different items—at rock-bottom prices (E.g.
ALDI (Germany): Known for its simplified shopping experience and low prices)
○​ Hard discounters focus on a no-frills shopping experience, offering a limited selection of high-demand
products.
○​ Goods are often private-label brands, minimizing overhead costs and enabling extremely low prices.
○​ These stores target highly price-sensitive consumers.
●​ Hypermarkets: Hybrid retailing format combining the discounter, supermarket, and warehouse club approaches
under a single roof (200,000 to 300,000 square feet) (E.g. Carrefour (France): Operates globally as a hypermarket
offering diverse products)
○​ Hypermarkets are massive stores offering an extensive range of products, including groceries, clothing,
electronics, and household items.
○​ Their large size and comprehensive product range make them one-stop destinations for shopping.
○​ Often located on the outskirts of cities, hypermarkets cater to families and bulk buyers
●​ Superstores: The label many in the retailing industry use when talking about stores such as Toys ‘R’ Us, Home
Depot, and IKEA (E.g. IKEA (Sweden): Specializes in affordable, ready-to-assemble furniture and home goods)
 ○​ Superstores are large retail outlets focusing on specific product categories, such as toys, home
improvement, or furniture
○​ These stores often offer a deep inventory within their specialty, providing a wide variety of options for
customers
○​ They cater to customers looking for a specific type of product rather than general shopping
●​ Shopping Malls: Group of stores in one place, leisure destination (E.g. Mall of America (USA): One of the largest
malls globally, featuring hundreds of stores, restaurants, and attractions)
○​ shopping malls are large complexes that house multiple retailers, food courts, and entertainment options,
serving as both shopping and leisure destinations
○​ They attract foot traffic due to the variety of stores and services under one roof
○​ Anchor stores like department stores or hypermarkets are often used to drive traffic to smaller retailers
●​ Outlet Stores: Dispose of excess inventory, out-of-date merchandise, or factory seconds. (E.g. Nike Factory Store
(USA): Sells discounted sportswear, including overstock and discontinued items.)
○​ Outlet stores are retail locations where manufacturers sell excess or discontinued inventory directly to
consumers at discounted prices
○​ They are often located in outlet malls and cater to bargain hunters looking for branded goods at lower costs
2.​ HANDLING THE EXPORT ORDER
a.​ Handling the export order

b.​ Order received directly from prospective importer

●​ Order contains the essential facts concerning the desired merchandise & shipment
●​ Exporter send confirmation of receipt
●​ Exporters prepare Proforma Invoice (type & amount of merchandise, unit costs & extensions, expected weights &
measures, terms of sales and payment, etc.)
c.​ Order received from branch or representative overseas
●​ Use a combination order form and sales contract
●​ Exporter accept the order, then complete & sign the form (both the seller & buyer)
●​ Indent order is between final purchaser & overseas- based branch office/ distributor of export
d.​ Export licenses
●​ Individual countries have their own export laws
●​ Control the export of products for reasons (national security, foreign policy, short supply, preservation of cultural
property, assisting of industries using domestic products, revenue purpose)
e.​ Financing/ payment & other terms of sale
●​ Getting the merchandise from the exporter’s plant to the port
●​ Getting the merchandise through outbound Customs
●​ Getting the merchandise abroad ship (or other mode of transport)
●​ Paying for the freight
●​ Paying for insurance
3.​ TREND: FROM TRADITIONAL TO MODERN CHANNEL STRUCTURES
a.​ Trend: from traditional to modern channel structures
New forms, new alliances, and new processes
●​ Walmart, Tesco, and Carrefour are all having trouble with their biggest stores and thus are downsizing to “compact
hypermarkets” of around 3,000–5,000 square meters instead of 10,000 square meters.
●​ IKEA is opening smaller stores as young, urban customers would rather shop online rather than drive, ordering their
purchases from touchscreens in the small showroom and arranging for pickup or delivery later.
 ●​ In India, the familiar clutter of traditional retailers is fast giving way to the wide aisles of new local and foreign
supermarkets.
Trends:
●​ Walmart is expanding all over the world—from Mexico to Brazil and from Europe to Asia, with occasional setbacks in
a few countries such as India and South Korea, where it sold its five stores
●​ Avon is expanding into eastern Europe; Amway is expanding into China and L.L. Bean and Lands’ End have
successfully entered the Japanese market.
➔​ making discounting, direct marketing, self-service, supermarkets, mass merchandising, and e-commerce concepts
common all over the world, elevating the competitive climate to a level not known before.
b.​ The Internet
●​ The increasing importance of e-commerce as an alternative distribution solution.
●​ The Internet serves as a critical distribution channel for multinational companies and as a source of products for
businesses and consumers, often combined with other approaches.
●​ E-commerce is used to market B2B services, consumer services, consumer products, and industrial goods through
the World Wide Web.
c.​ Issues in the cybermarketplace
●​ Digital divide: The gap between regions or populations with access to digital technologies and those without (E.g. A
luxury brand targeting global markets might invest in both online platforms and physical stores in regions where the
digital divide persists, such as parts of Africa or Southeast Asia)
○​ Unequal Market Access: Countries with limited internet infrastructure or low digital literacy struggle to
participate in e-commerce. For instance, many rural areas in developing countries lack reliable internet,
reducing the potential customer base
○​ Strategic Implications: Companies must adapt their strategies to bridge the gap, such as creating offline
marketing campaigns or integrating hybrid models (e.g., order online, pick up offline).
●​ Growing online shopping, but varied across world: While online shopping is expanding, adoption rates and
preferences differ significantly across regions(Amazon provides cash-on-delivery options in India to cater to local
preferences, while heavily promoting Prime in the US for quick delivery incentives)
○​ Regional Differences:
■​ Mature markets (e.g., the US, Europe) have high e-commerce penetration, while emerging markets
may lag behind.
■​ Consumer trust in online payments also varies—markets like China have embraced platforms like
AliPay, while others prefer cash on delivery (COD).
○​ Localization: Global businesses must localize their e-commerce strategies, such as supporting preferred
payment methods or addressing local logistical challenges.
●​ Diverse credit card culture: Variations in credit card adoption and usage among countries (E.g. In China, companies
like Nike accept WeChat Pay and AliPay alongside international credit cards, ensuring accessibility for local
consumers)
○​ Payment Preferences: In some regions, credit cards dominate (e.g., the US), while others rely on
alternative methods like mobile payments, e-wallets, or bank transfers
○​ Challenge: Businesses must integrate multiple payment systems to cater to diverse consumer habits.
●​ Disintermediation process: The removal of intermediaries in the supply chain, allowing businesses to sell directly to
consumers online (E.g. Tesla sells its cars directly through its website and company-owned stores, bypassing
traditional dealerships.)
○​ Opportunities:
■​ Reduces costs by bypassing distributors and retailers, enabling competitive pricing.
■​ Increases control over branding, customer data, and relationships.
○​ Challenges: Requires companies to manage their logistics, customer service, and marketing, which can be
resource-intensive.
●​ Cannibalizing existing distribution channels?: The introduction of e-commerce channels may reduce sales through
traditional distribution networks (e.g., physical stores, wholesale distributors). (Nike adopted a direct-to-consumer
model, reducing reliance on third-party retailers, but faced backlash from distributors who felt excluded.)
○​ Channel Conflict: Retailers may resist carrying a brand’s products if the brand offers the same items online
at a lower price.
○​ Need for Balance: Companies must create strategies that integrate both online and offline channels to
avoid alienating existing partners.
●​ Black Friday/Cyber Monday: Global shopping events with massive online sales, primarily originating from the US but
increasingly adopted worldwide (E.g. Amazon prepares months in advance for Black Friday by expanding
warehouse capacity and offering region-specific discounts to maximize global sales.)
 ○​ Consumer Behavior: These events drive significant traffic and sales online, creating both opportunities and
logistical challenges for international businesses.
○​ Localized Strategies: Companies must adapt their promotions to match regional preferences and shopping
calendars (e.g., Singles' Day in China).
○​ Logistics and Supply Chain: Handling surges in demand during these events can strain resources and
impact delivery times, affecting customer satisfaction.
d.​ Grey markets/ parallel importing
●​ “A grey market generally consists of those unauthorized distributors and dealers that circumvent channel
arrangements by buying a company’s products in low-price markets and selling them in high-price markets at lower
prices than those offered by authorized channel members”
●​ “Parallel importation is an unauthorized import into a country of non- counterfeit goods imported without the express
permission of the intellectual property owner.”
Example:
●​ Luxury goods: High-end brands like Rolex or Louis Vuitton often face parallel importing because their products are
cheaper in some countries (e.g., the UAE) than in others (e.g., Europe).
●​ Electronics: Apple iPhones are frequently sold in grey markets. For instance, phones purchased in the US or Hong
Kong are resold in markets like India or Europe due to lower initial pricing
●​ Pharmaceuticals: Medicine purchased in low-cost countries like India is often imported and sold in high-cost
countries such as the US, bypassing local regulations and pricing controls.
●​ Automotive Parts: Car parts designed for one region may end up being sold in another, often without warranties or
after-sales support.

PROMOTION (CHAPTER 13 TRONG SÁCH)

In Chapter 13 , we discuss:
● export marketing promotion and communications decisions
● alternative methods of promotion:
— personal selling
— the many types of sales promotion
— publicity
— the many types of advertising
● developing promotional programs and strategies
● standardization or adaptation of marketing communication
● advertising transference and management issues
I.​ INTRODUCTION
Communication is essential in international marketing, requiring not only the availability of products or services but also
effective information for buyers. International marketing communication involves cross-cultural interaction, which may occur
between cultures or within a single nation, as seen in multilingual countries like India.
While cultural differences exist, some market segments across nations share similarities. For example, youthful motorcyclists
in Europe may respond to identical advertising, and farmers using tractors under similar conditions can be influenced by
uniform promotional approaches.
Challenges in international marketing communication include barriers such as government regulations. For instance, in
Germany, English advertisements are allowed for foreign products but restricted for domestic ones. Regulations may dictate
production processes, such as requiring local crews for commercial production in Australia or partial involvement in the UK.
Restrictions also extend to promotional content, like South Korea's prohibition on product comparisons or India's ban on ads
that demean any group or reinforce gender stereotypes. Additionally, bans on promoting tobacco at sporting events and
restrictions on unsolicited advertising emails, as in China, highlight the evolving regulatory landscape. These examples
underscore the complexities of global marketing communication.
 II.​ EXPORT MARKETING PROMOTION AND COMMUNICATION DECISIONS
The promotion decisions faced by export marketing management can be reduced to the following:
● What messages?
● What communications media?
● How much effort or money to spend?
These decision areas are interrelated. Export marketing promotion takes various forms:
● Personal selling: sales people are used to communicate primarily face-to-face with prospective customers.
● Advertising: a nonpersonal presentation of sales messages through various ‘mass’ media, paid for by the advertiser.
● Sales promotion: all sales activities, which supplement and strengthen personal selling and advertising. Activities usually
are nonrecurrent and have a relatively short-run ‘life.’
● Publicity: any kind of news about a company or its products that is reported by some media, and is not paid for by the
company.
Although discussed in the context of export marketing, the principles and practices also apply to other international market
entry modes, such as strategic alliances or direct foreign investment. While much of the focus is on advertising, two key
points should be noted: (1) these principles extend to all communication activities, including personal selling by exporters or
intermediaries, and (2) advertising is just one part of the broader promotional mix. Alternatives to traditional advertising
include public relations, direct mail, consumer promotions (e.g., coupons), in-store displays, business-to-business
promotions, telemarketing, event sponsorships (e.g., the World Cup), product placements, and trade exhibitions like the
Chinese Export Commodities Fair or the Hong Kong Electronics Fair.
Promotion strategies are typically categorized into "push" and "pull" approaches. A pull strategy involves preselling a product,
so buyers actively seek it at the point of purchase. In contrast, a push strategy focuses on resellers, where buyers rely on
salesperson guidance. Most real-world situations fall between these extremes, and the emphasis on push or pull will shape
the mix of promotional methods used.
Selecting the right promotion mix requires considering factors such as available funds, promotion costs, competition intensity,
product type, seasonality, price, market entry mode, target market characteristics, segment sizes, and available resources
and media. The right combination depends on aligning these factors with marketing goals.
The International Communications Process

A concluding comment
Communication with buyers in export markets may not be effective for a number of reasons. Of particular importance to
export marketing communication are the following:
● The message may not get through to the intended recipient. Either the medium may not reach the recipient, or the
message may not be perceived for some reason, perhaps because the person is not interested in the message at the
moment, or other distractions may take the intended recipient’s attention away from the message. Such difficulties may be
due to lack of knowledge about which media are appropriate to reach foreign target audiences, and lack of knowledge about
when to reach them (e.g., scheduling difficulties).
● The message may not be understood in the way intended by the sender. Because of lack of knowledge of the factors that
influence how persons from different cultures will interpret messages, it is possible for a message to be perceived and
interpreted incorrectly.
● The message may not induce the recipient to take the action desired by the sender. Although a message may be
perceived correctly, lack of knowledge about foreign cultural factors that influence attitude formation, purchasing behavior,
and so forth, may cause communication to fail in producing the desired effect. Such failure may be due to lack of knowledge
on such matters as consumer motives, reference group influence, or consumers’ economic circumstances.
 III.​ ALTERNATIVE TECHNIQUES OF PROMOTION
Personal selling: to communicate primarily face-to-face with prospective customers
Advertising: a nonpersonal presentation of sales messages through various ‘mass’ media, paid for by the advertiser
Sales promotion: sales activities, which supplement & strengthen personal selling & advertising
Publicity: news about a company or its products that is reported by some media, and is not paid for by the company
1.​ Personal selling
The success of export marketing ultimately depends on people. Personal selling, a key component, involves direct
communication between a company representative and a prospective buyer, focusing on understanding buyer needs, linking
them to the product, and persuading the customer to purchase. Effective salespeople—well-selected, trained, compensated,
and supported—often determine the difference between success and failure in foreign sales.
In global sales, cultural norms and protocols are crucial. Active listening, managing verbal and nonverbal communication,
and addressing cultural barriers are integral to effective selling. Salespeople must perform three essential roles: selling,
maintaining customer relations, and gathering market information to support advertising and promotion planning.
1. The actual selling activity: The communication of product information to customers, and obtaining orders.
2. Customer relations: The salesperson must at all times be concerned with maintaining and improving the company’s
position with customers and the general public.
3. Information gathering and communicating: The salesperson is often able to provide information that might be useful in
planning advertising and trade promotion programs.
The personal selling process includes stages such as prospecting, approaching, presenting, handling objections, closing,
and follow-up. These stages may vary in emphasis by region; for example, persistence is critical in the U.S., while patience is
essential in markets like Japan and China, where negotiations can span years.
Personal selling is particularly effective in countries with advertising restrictions or low labor costs, where large local sales
forces are feasible. In such markets, personal interaction may be the primary way to communicate with potential buyers,
ensuring successful market entry.
2.​ Sale promotion
Definition and purpose of sales promotion
Sales promotion refers to short-term activities that complement and strengthen personal selling and advertising.
It creates tangible value for products or brands through methods such as discounts, "buy one, get one free" offers, and other
incentives.
Objectives include encouraging nonusers to try products, boosting consumer demand, and increasing product availability
within distribution channels.
Selection and adaptation of sales promotion
Exporters must choose sales promotion tools suitable for their products, target markets, and budgets.
Techniques that may have lost appeal in domestic markets could still perform well in foreign markets.
Sales promotions in Europe are highly regulated, with variations across countries. For instance, promotions like cashback
offers, lotteries, or in-pack premiums are permitted in some countries but restricted in others, often to protect small retailers.
Regional differences in promotional strategies
Promotional packages often vary to elicit stronger consumer responses across regions, even when there are no language
barriers.
Example: In Scotland, Brooke Bond markets its tea as "Scottish Blend," distinct from "PG Tips" used in the rest of the UK.
While similar tactics are employed, the Scottish campaigns include culturally tailored elements to resonate locally.
Harmonized regulations within the EU could enable more standardized promotional programs across member states in the
future.
Key tools in sales promotion
Six tools are particularly relevant for developing foreign markets, with various methods to enhance their impact:
1.​ Foreign Catalogs: Useful for showcasing product lines to international business clients.
2.​ Samples: Effective for introducing products to both businesses and consumers, often as part of non-price
promotions like free samples or premiums.
3.​ Export House Organs: Company publications tailored for export audiences, supporting brand awareness and trust.
4.​ Motion Pictures/Videos or Slide Films: Visual materials for presentations or marketing, often paired with
demonstrations or event sponsorships to attract interest.
5.​ Trade Fairs and Exhibitions: Platforms to engage directly with buyers and partners, often incorporating contests,
sweepstakes, or sponsorships of special events to draw attention.
6.​ Point-of-Purchase (POP) Materials: Items like displays or signage to promote products at retail locations,
enhanced with in-store demonstrations, cents-off deals, or product tie-ins to stimulate purchases.
These tools can integrate diverse sales promotion techniques, including:
●​ Non-Price Promotions: Free samples, "Buy 1, Get 1 Free" offers, contests, and sweepstakes.
●​ Price Promotions: Discounts, coupons, mail-in refunds, and price reductions.
Other methods include: Cents-off deals, in-store demonstrations, product tie-ins, gifts, sponsorships of events (e.g., the
Olympics), fairs, and point-of-purchase displays.
Ở những TT khó tiếp cận NTD do hạn chế về phương tiện truyền thông, tỷ lệ phần trăm ngân sách khuyến mại được phân
bổ cho khuyến mại có thể phải tăng lên.
Ví dụ:
-​ Ở Mỹ Latinh, Pepsi-Cola và Coca-Cola chi cho những chiếc xe tải dành cho lễ hội, đi đến các ngôi làng xa xôi để
quảng bá sản phẩm.
-​ Oreo Trung Quốc đạp xe được trang bị vỏ bánh giống như bánh Oreos, phát hàng mẫu cho hơn 300.000 người tiêu
dùng.
-​ Phát hành Windows 7, chương trình hợp tác Microsoft/Burger King tại Nhật Bản, món “Windows 7 Whopper” nặng 7
miếng, chứa 2.120 calo để bán với giá 777 Yên cho 30 bánh đầu tiên ở 15 cửa hàng, sau đó giá x2.
a.​ Foreign Catalogs
The foreign catalog plays a key role in bridging the gap between a buyer and a seller in international markets, especially
when buyers are far from sales offices. It must attract attention, arouse interest, stimulate action, and make it easy for the
buyer to act by providing all necessary details.
Purposes of the foreign catalog
-​ Create interest and attract readership. A colorful cover, as much color as possible in the body of the catalog, and a
well-printed and easily read text are ‘musts.’
-​ Mirror the personality of the manufacturer or exporter. An introduction giving years in business, the array of products,
number of plants and their locations, the company’s status in the industry, and similar information is invaluable to the
buyer. To supplement this impression, the catalog must also be well bound, logically arranged, and attractive.
-​ Carry the reputation of the manufacturer or exporter into world markets. Often this includes a statement regarding
trademarks, for the exporting manufacturer must realize that domestic product names are often unknown abroad.
-​ Make buying easy. The foreign catalog must answer all questions that a buyer might want answered about the
product, terms, and so on. It should make ordering easier for the foreign dealer.
-​ Create the desire for ownership. This can be achieved through action-packed illustrations or ultraclear photographs
of the product in use.
-​ Supply all the facts that a salesperson would present in person. These include the features of the product that make
it desirable to the consumer and the salesperson’s arguments, and how complaints and later questions are to be
handled.
The foreign catalog is often more persuasive than personal selling because printed material from a trusted company is
considered more reliable than verbal claims.
Challenges and considerations
-​ A foreign catalog should not be a direct translation of a domestic version. The content should be edited to suit local
languages, idioms, and trade terminologies.
-​ The catalog must clearly describe the product’s qualities and qualifications, with a focus on presenting the best
selling points.
-​ Consumer catalogs require more adaptation than B2B catalogs to align with local cultural norms and preferences.
-​ Brochures can be helpful, especially for salespeople, distributors, and agents. However, exporters should assess the
need for mass distribution due to high costs.
-​ Collaborating with local agents and distributors ensures accurate translations and cultural relevancy.
-​ By meeting these requirements, the foreign catalog becomes a powerful tool in the exporter's marketing strategy,
often more effective than personal selling in some markets.
b.​ Samples
Samples offer potential foreign buyers a tangible sense of the product’s form and quality, reducing the risk of costly
misunderstandings related to styles, sizes, or models. This is especially important when buyers are far from the
manufacturer. Successful salespeople recognize that samples help prevent such errors.
Types of sampling methods
-​ The most common is direct sampling by mail, express or courier, by which means the export marketer sends a
specimen of its product(s) to the distant individual buyer or even the ultimate consumer.
-​ Second, and steadily growing in importance, is the use of samples by residential agents, branch office managers,
and traveling sales people.
-​ Then there is the use of samples at sample fairs, import fairs, and similar demonstrational and promotional
enterprises for buyers. In some places sample fairs take the form of a permanent display of manufacturers for buyers
to look at the available offerings.
Direct sampling is best for small or low-cost items like food, medical supplies, or cosmetics, where the recipient can try the
product under normal conditions. Samples are less effective for products like mechanical devices or large items such as
furniture and appliances, where size and value are harder to convey through a sample.
Marketers should be aware of national laws governing sales promotions, as these can vary widely across countries. For
example, in Malaysia a contest may be used, but it must involve a game of skill and not chance. In Germany, only full-value
coupons may be used in a consumer promotion; in the Netherlands and Switzerland, although they are legal, major retailers
refuse to accept coupons.
c.​ House organ and company-published magazines
House organ and company-published magazines, whether offline or online, are valuable tools for sales promotion. They help
provide company personnel, distributors, and agents with updates on successes, promotional ideas, contest results, and
employee recognition, fostering enthusiasm and better sales performance abroad. Unlike catalogs, house organs cover a
wider range of business topics and are effective for goodwill building and institutional advertising.
While most companies produce house organs in their home country, some established exporters may create local editions
with minimal central control. These editions are often successful when there is a system for sharing information between
foreign markets. With the rise of the Internet, house organs have increasingly become company websites.
d.​ Films, slides, and personal computers
Films, videos, and DVDs are powerful sales aids for foreign markets, though costly. They provide a comprehensive view of
the manufacturer’s products, facilities, and processes, effectively conveying the company’s message to foreign customers.
The film format offers the advantage of combining visual and spoken elements, ensuring that key points are highlighted and
remembered. It also serves as a tool for distributors and agents, saving energy for the final sale and boosting customer
interest.

While more affordable, slide films are less effective than full-motion videos but still serve as a practical solution for
cost-sensitive markets. Personal computers, including laptops and netbooks, can now be used similarly to films, videos, and
slides for promotional presentations. With the rise of the Internet, computers have become essential for sales promotion and
advertising, while fax machines are also utilized for promotional purposes.
e.​ Trade fairs and exhibitions
Trade fairs and exhibitions play a crucial role in the export development process, especially for small and medium-sized
companies. These events can be general, like the Hanover Fair in Germany, or specialized, such as the China International
Maternity and Baby Industry Exposition. Trade fairs offer a concentrated platform for manufacturers and exporters to
showcase their products. The East China Fair, for example, facilitates economic cooperation between Chinese and foreign
companies and attracts thousands of exhibitors and visitors.
Trade fairs are integral to the selling process, requiring skills such as gathering names, product demonstrations, offering
prizes, and client promotions. They provide opportunities to establish business relationships, sign contracts, and introduce
new products. While larger companies use trade fairs for prestige and product launches, smaller firms benefit from low-cost
exposure to a targeted audience.
Some trade fairs are by invitation only, such as the Chinese Export Commodities Fair in Guangzhou, requiring preparation
like contacting potential clients and translating materials. Additionally, consumer-focused fairs, like the Christmas Market in
Aachen, Germany, attract large crowds and offer an opportunity for product sales and international exposure.
f.​ Point-of-purchase materials
Manufacturers and exporters of packaged consumer goods such as cosmetics, paper-tissue products, or proprietary
pharmaceuticals sometimes find it useful to provide point-of- purchase (POP) literature and displays to sale subsidiaries,
agents, distributors, and retail dealers. Successful POP merchandising ideas in one country can often be applied, directly or
in modified form, in another country. Local POP materials can sometimes also be tied in with advertisements run in local
media. Such materials may also contribute to, and be in harmony with, a uniform worldwide image that a
manufacturer/exporter may want to achieve. Some companies prepare POP materials domestically in rough form for
shipment abroad. Local foreign representatives usually handle production and printing. In the rare event that the POP
materials are produced in the home country, the copy would most likely be left blank so that the local distributor or agent can
silk-screen or overprint the copy in the local language.
3.​ Public Relations
Public relations (PR) is a key component of international marketing. It focuses on building relationships with the media to
help companies communicate key messages to customers, the public, and government regulators. PR is a powerful tool for
achieving marketing objectives that may not be as easily attained through paid advertising, offering more cost-effective
solutions.
PR efforts aim to encourage positive stories about companies in the media, which can enhance their reputation and
foster trust. For example, promoting a company’s social responsibility is often more effectively achieved through favorable
editorial coverage rather than paid ads.
PR also plays a critical role in managing rumors, negative news, and crises. By addressing issues like global workplace
standards or product safety, PR can prevent significant damage to the company’s reputation.
●​ Example: Google’s Political Battle in China: Google’s 2010 exit from China due to censorship and hacking concerns,
followed by its 2018 return with Google Maps and Google Translate, shows the adaptability and importance of PR in
navigating sensitive political environments.
 ●​ Example: Toyota's Product Safety Crisis: After the accelerator issues, Toyota’s CEO, Akio Toyoda, publicly
apologized during congressional hearings in the U.S. and in China. The "bow and apologize" approach is a
long-standing PR strategy used to restore trust during a crisis.
Common PR tools include press releases and editorial content. These tools are used to highlight new products, plant
openings, company achievements, and the role of the company in the local economy. PR materials often come from
domestic operations but can be adapted for international use through trade journals or local publications.
Publicity, a major element of PR, involves nonpaid news or editorial content about the company, its practices, or its products.
Unlike direct export promotion, publicity is not under the control of the exporter, as the media decides which stories to cover.
However, effective publicity can significantly influence global market perceptions, especially in international markets where
paid advertising might be less effective.
As global marketing expands, PR has become more crucial. Practices can vary greatly depending on cultural, social, and
political contexts, but technology—such as the Internet, satellites, and high-speed communication tools—has expanded PR's
reach, making it easier to connect with media outlets worldwide.
Corporate sponsorships, a blend of PR, sales promotion, and advertising, are used to build brand image and align with
positive causes or events. Sponsorships are most effective when integrated with consistent advertising campaigns.
-​ Educational and cultural contributions:
+​ P&G: Built schools in Vietnam, marking donations with plaques in classrooms.
+​ Samsung: Sponsored renovations of a building in a Roman square, which locals appreciated, but the
advertisements disrupted the site’s aesthetics.
-​ Sporting event sponsorships:
+​ McDonald’s: Sponsored multiple Olympic Games from Sydney (2000) to PyeongChang (2018) but ended its
agreement early before Tokyo 2020 due to cost-cutting.
+​ Intel: Partnered with the Tour de France, supporting its official website, demonstrating how sponsorships
enhance visibility and engagement.
Corporate sponsorships align a company’s brand with positive values and public goodwill. They also generate significant
visibility in global events, contributing to a cohesive brand strategy. For maximum impact, sponsorships should be part of an
integrated marketing campaign that includes advertising and PR to reinforce the brand message.
By leveraging PR and sponsorships effectively, companies can build strong international reputations, enhance brand loyalty,
and connect with diverse audiences across markets. These tools, when coordinated with advertising and digital
communication strategies, amplify a company’s global marketing efforts.
4.​ Advertising
Advertising, defined as paid, nonpersonal communication through various media, is a cornerstone of international marketing.
It promotes awareness, builds brand identity, and communicates key messages to diverse global audiences. Successful
advertising requires careful consideration of cultural, economic, and regulatory factors across markets.
4.1. Advertising strategy options
Some types of advertising strategies
1.​ Fully standard
This strategy uses unified messages across global markets with minimal adaptation, ensuring consistent brand imagery. The
goal is to build a strong global brand identity through elements like music, visuals, or overarching messaging.
Example: Major brands like Coca-Cola or Apple often use this strategy, focusing on brand elements like music, logos, or
iconic imagery throughout global campaigns with little modification.
2.​ Some modifications: Voice-over
This strategy allows for changes in certain elements of the advertising campaign to better suit each market, while the core
elements like the central message and brand imagery remain the same. Modifications are typically related to language or
sound, such as voice-overs or language changes.
Example: Coca-Cola used BLACKPINK in global campaigns, keeping the core message of refreshment while adapting
elements for different markets. This included localizing the language for voice-overs and song lyrics, adjusting visuals to
reflect local culture, and leveraging BLACKPINK’s global appeal to connect with both K-pop fans and wider audiences.
3.​ Partial Adaptation: Different Values
This strategy maintains the core themes of the campaign but adapts the execution based on cultural values and market
specifics. This allows the campaign to align better with local consumer preferences without losing the brand’s global identity.
Example: McDonald’s adjusts its product offerings and menus to cater to local tastes (e.g., McDonald's in India doesn’t serve
beef, offering vegetarian alternatives instead) or Gillette tailors its ads to reflect cultural values regarding masculinity or
personal care in different regions.
4.​ Adaptation: Multi-Local
This strategy is fully tailored to specific markets, incorporating local cultural references, values, and preferences to build trust
and stronger connections with consumers. It is a highly localized approach, which aims to show a deep understanding and
respect for each market’s unique characteristics.
Example: A brand might create entirely different campaigns for each region, using local celebrities, cultural practices,
consumer habits, or regional festivals to resonate with audiences. Coca-Cola used this approach with its "Share a Coke"
campaign, replacing the brand name on cans with popular names in each country.
4.2. Tactical Considerations
4.2.1. Media Options in Global Advertising
a.​ Television and Radio
Television and radio remain highly popular in several markets, especially in countries like China, where TV has an extensive
reach across various demographics. These media offer mass audience access, but regulations and broadcasting times can
vary significantly between countries. In some markets, TV may have stricter content rules, while radio may cater to specific
regions or languages.
Example:
-​ In China, almost all households in major cities have a television and most adults watch TV and listen to the radio
every day.
-​ France limits advertising time to 18 minutes per day but has now extended it to 12 minutes per hour per channel.
-​ South Korea has two television companies, both government-owned, that only broadcast a few hours a day, not from
midnight to 6am and often not between 10am and 5:30pm on weekdays.
b.​ Print Media
Print media, such as newspapers and magazines, are still widely used in many regions, offering a more targeted reach.
Magazines like Elle and Woman’s Day in China specifically cater to the female demographic, offering advertisers the chance
to engage with highly specific audiences based on interests, age groups, and lifestyle.
Example: In China, women’s magazines have a strong following, making them ideal for brands targeting female consumers
in that market.
c.​ Digital Advertising
With the rise of digital platforms such as Google, Facebook, and YouTube, digital advertising has become a dominant force
in global markets. These platforms enable precise targeting based on factors like location, demographics, and behavior,
providing measurable outcomes for advertisers.
Example: In markets like the U.S. and Europe, advertisers use Facebook’s detailed targeting options to engage specific
customer segments, from age to interest, while YouTube ads can track engagement in real-time.
d.​ Outdoor Advertising
Outdoor advertising includes billboards, vehicle ads, and even innovative options like laser projections (e.g., in Slovenia).
These ads capture attention in high-traffic areas and are often used for local or regional advertising campaigns, offering
creative ways to engage audiences.
Example: In cities like New York or Tokyo, large-scale billboards in high-traffic areas like Times Square or Shibuya Crossing
have a massive impact, while in Slovenia, laser projections can bring a unique and modern twist to outdoor advertising.
e.​ Direct Mail and Niche Media
In markets like Russia, direct mail is an effective advertising method, as response rates can be higher compared to other
regions like the U.S. Niche media, such as specialized publications or local channels, allow brands to engage with smaller
but highly targeted groups.
Example: Direct mail campaigns in Russia often see better engagement than in the U.S., as consumers in Russia are more
receptive to receiving physical promotional materials. Similarly, niche magazines or newsletters targeting specialized
interests (e.g., technology or fashion) can be highly effective in specific markets.
4.2.2. Key strengths of advertising
a.​ Global Reach and Cost Efficiency
Advertising allows companies to reach large audiences at a relatively low cost per contact when compared to direct selling. It
enables brands to communicate their messages across multiple countries and regions, ensuring mass-market penetration
while keeping expenditures in check.
Example: Global brands like Coca-Cola can run campaigns that reach millions of consumers across the world without
having to rely on costly face-to-face interactions. Advertising through TV, radio, or digital platforms can provide widespread
reach at a fraction of the cost of personal selling.
b.​ Brand Building
Advertising plays a crucial role in establishing long-term brand recognition and loyalty, especially for consumer goods aimed
at mass markets. Consistent advertising over time helps create a strong brand identity, which can drive repeat business and
foster emotional connections with consumers.
Example: Brands like Nike and Apple have used advertising to create iconic identities that go beyond just selling products;
their campaigns reflect a lifestyle, inspiring loyalty and long-term customer relationships.
c.​ Versatility Across Media
Advertising can leverage a wide range of media channels, both traditional (TV, print, radio) and digital (social media,
websites, search engines). This versatility allows marketers to choose the best channels that align with their target
audience’s preferences, ensuring that their message is effectively communicated.
Example: A brand may use TV ads for mass-market awareness, social media for engagement, and search engine ads for
conversion, creating a holistic campaign that covers multiple touchpoints.
d.​ Sponsorships and Events
Sponsorships and event marketing can significantly boost brand visibility and enhance associations with positive values,
such as sportsmanship, innovation, or community. By sponsoring high-profile events or popular organizations, brands can
build positive associations and connect with large audiences.
Example:
-​ McDonald’s sponsored multiple Olympic Games (2000–2018), aligning its brand with global sportsmanship and
health initiatives.
-​ Intel partnered with the Tour de France, enhancing its visibility among a global audience while promoting its
association with performance and technology.
4.2.3. Challenges of Advertising
a.​ Cultural Adaptation
To resonate with diverse audiences, advertising campaigns must be adapted to local cultures, languages, values, and norms.
Failing to do so can result in messages that miss the mark or even offend potential customers.
Example: In Japan, ads often incorporate cultural elements like the "kawaii" (cute) aesthetic, appealing to the younger
generation by featuring characters, mascots, or design elements that reflect Japanese culture.
b.​ Regulatory Constraints
Advertising is subject to various legal and regulatory constraints that differ by country. These rules can limit where, when,
and how ads are shown, as well as the content that can be included.
Example: In Vietnam, TV ads are limited to just 3 minutes per hour, while Germany requires that TV ads be scheduled a
year in advance. Such regulations can limit the flexibility and timing of ad campaigns.
c.​ Effectiveness Measurement
The effectiveness of advertising campaigns is often cumulative, making it difficult to directly measure its impact on immediate
sales. For campaigns focused on building brand awareness or long-term trust, the results may not be apparent in short-term
sales figures.
Example: A campaign by Dove, focused on body positivity and self-esteem, may not result in immediate product purchases
but can build long-term brand loyalty and trust, which may lead to future sales.
d.​ Costs and Competition
Creating high-quality advertising campaigns and localizing them for different markets can be expensive. Additionally, in
saturated media environments, where multiple brands compete for attention, it can be challenging to stand out and maintain
engagement with audiences.
Example: Running a TV ad during prime time can cost millions of dollars, and competing brands may push for the same
spot, driving up the costs. The competition for consumer attention is fierce, particularly in crowded markets like the U.S. or
India.
Conclusion
Advertising is a vital tool for international marketing, combining broad reach with versatility across media. Its success
depends on balancing global consistency with local relevance, adhering to regulations, and integrating with other marketing
tools like sponsorships and public relations. Strategic, culturally aware campaigns enable companies to build strong brands

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and connect effectively with diverse global audiences.
SO SÁNH 4 CÁI PROMOTION THÔI CHỨ KHÔNG GÌ
Strengths Weaknesses

Personal Selling Highly effective in converting prospects into High cost per contact due to travel expenses
customers, with a higher sales-to-contact ratio and time spent away from home for export
than nonpersonal methods. salespeople.

Sales Promotion Versatile, combining techniques like sales aids, Complements advertising and personal selling
displays, and training to enhance channel by supporting salespeople and distributors.
performance. Trade fairs and exhibitions are
particularly effective, offering personal contact
with numerous potential buyers in a short time.

Publicity High credibility. Messages presented as news Publicity comes with significant risks and
items are often more trusted than challenges, such as lack of control,
advertisements. unpredictability, potential for negative coverage,
short-term impact, difficulty in measuring
effectiveness, and dependence on external
relationships.
 Advertising Cost-effective for reaching large audiences, Limited success in directly persuading
especially for mass promotion. consumers to purchase products.
Effective for creating awareness or long-term Impact is often cumulative and hard to
brand/product acceptance. measure, especially when objectives are
Sponsorships (e.g., sporting and cultural events) focused on communication rather than
enhance visibility and engagement. immediate sales.
IV.​ ETHICS AND INTERNATIONAL MARKETING
Green movement: political/consumer movement favoring environmentally friendly approaches.
Eco-labelling: a label or logo to show that a company is socially responsible.
1.​ The point of return: recycling options offered by some major companies

Company Shipping/recycling fees In-store drop-off

Apple Free with shipping form Batteries and iPods accepted at Apple stores

HP Free shipping via FedEx for HP and Compaq products Stationery stores accept many HP and non-HP
with pre-printed voucher consumer products, except TVs

Dell Free shipping or pick-up of Dell products, and free The Dell Reconnect partnership with Goodwill
pick-up of non-Dell items with purchase of a Dell accepts any brand of
product electronics except mobile phones

2.​ Ethical issues in international marketing activities

Marketing activity (Un)Ethical issues

Positioning - Positioning low-quality products as high-quality products.

- Positioning a product as performing a function it does not actually deliver (e.g.,
cholesterol-lowering food, anti-aging cosmetics).
- Exploiting customer fears by claiming they will lose certain benefits if they do not use the
product.

Product - Products that harm customers/users (e.g., dangerous toys for children).
- Products that pose safety risks to users (e.g., faulty electronics or vehicles).
- Products that cause health or environmental issues (e.g., side effects of drugs).
- Lack of clear and full product information, such as hidden trans fats, high sugar/salt levels in
food products.
- Using environmentally unfriendly packaging materials.

Price - Price fixing or agreements between competitors to inflate prices higher than market value.
- Discriminatory pricing against certain groups or failure to provide fair terms.
- Hidden fees or unexplained price increases beyond the stated tax rates.
- Exploitative pricing strategies, e.g., overcharging for life-saving drugs in underprivileged regions
like Africa.
- Illegal or unethical methods to meet sales targets, such as withholding customer refunds or
forcing sales quotas.

Promotion - Making false claims about product benefits through advertisements.

- Misleading customers through inconsistent or deceptive communication across marketing
platforms.
- Using inappropriate or culturally insensitive advertising language.
- Using discriminatory language or targeting vulnerable populations in ads.
- Promoting unethical refund policies or incentivizing deceptive marketing tactics.