International Marketing

2008 examination questions

End-of-chapter questions for discussion (S. Hollensen 2007)

Chapter 1: 3

Chapter 2: 1,3

Chapter 3: 1,3

Chapter 5: 1,3,4

Chapter 7: 2,3,5,6

Chapter 8: 1,3,5

Chapter 9: 1

Chapter 10: 1,5,8

Chapter 11: 1,3

Chapter 12: 2,5

Chapter 13: 1

Chapter 14: 5,6,9,11,14

Chapter 15: 1,6

Chapter 16: 1,2,5,6

Chapter 17: 1,2,3,5

Chapter 18: 1

Chapter 1

Question 3

What are the main differences between global marketing and marketing in domestic context?

Global marketing is defined as the firms commitment to coordinate its marketing activities across national boundaries in order to find and satisfy global customers needs better than the competition. This implies that the firm is able to :

• Develop a global marketing strategy, based on similarities and differences between markets

• Exploit the knowledge of the headquarters through worldwide diffusion and adoptions

• Transfer knowledge and best practices from and of its markets and use them in other international markets

If you are going global, you have to adapt to each market, and look at differences in cultures, laws and expectations in each country. Just look at McDonald and what they did before entering into Iran.

Chapter 2

Question 1

Export motives can be classified as reactive or proactive. Give examples of each group of export motives. How would you prioritise these motives? Can you think of motives other than those mentioned in the chapter? What are they?

Proactive motives represents stimuli to attemot strategy change cased on the firs interest in exploiting unique competences (special technology knowledge) or market possibilities

Reactive motives indicate that the firm reacts to pressures or threats in its home market or foreign markets and adjusts passively to them by changing its activities over time.

Proactive motives

• Profit and growth goals

• Managerial urge

• Technological competence/unique product

• Foreign market opportunities/market information

• Economies of scale

• Tax benefits

Reactive motives

• Competitive pressures

• Domestic market: small and saturated

• Overproduction/excess capacity

• Unsolicited foreign markets

• Extend sales of seasonal products

• Proximity to international customers/psychological distance

Question 3

Discuss the most critical barriers to the process of exporting

Forsmann et al, found that the three most important triggers for starting up operations internationally were as follows

• Management interest in internationalization

• Foreign enquiries about the companies products/ service

• Inadequate demand in the home market

• Laws and regulations

• Cost of going abroad (investments cost)

• culture

• lack of productive capacity

• lack of distribution channels

• lack of foreign market connections

Chapter 3

Question 1

Explain why internationalization is an ongoing process in constant need of evaluation?

The internationalization process where a lot of information needs to be processed has different dimensions such as foreign operation methods, Sales object, markets, organizational structure, finance and personal skills. These are in constant need of evaluation as the dimensions are variable and interdependent on each other.

Question 3

What are meant by the concept of psychological or psychic distance

Psychic distance is defined in terms of factors such as differences in language , culture and political systems witch disturbs the flow of information between the firm and the market.

Chapter 5

Question 1

Explore the reasons for using a marketing information system in the international market. What are the main types of information you would expect to use?

The role of an international market research is primarily to act as an aid to the decision maker. It is a tool that can help to reduce the risk in decision making caused by the environmental uncertainties and lack of knowledge in international markets. (Page 154)

In global marketing research both internal (firm-specific) and external (market) data are needed. Besides the split between internal and external data, the two major sources of information are primary data and secondary data. If we combine the split of internal/external data with primary/secondary data, it is possible to place data in four categories. (Page 155)

Question 3

What are the dangers of translating questionnaires (which have been designed for one country) for use in a multycountry study? How would you avoid these dangers?

The impact of language and culture is of particular importance when wording questions. The goal for the global marketing researcher should be to ensure that the potential for misunderstandings and misinterpretations of spoken or written words is minimized. Both language and cultural differences make this issue an extremely sensitive one in the global marketing research process. (Page 169)

The obvious solution of having questionnaires prepared or reviewed by someone fluent in the language of the country is frequently overlooked. On order to find possible translation errors marketers can use the technique of back translation, where the questionnaire is translated from one language to another, and then back again into the original language. (Page 171)

Question 4

Identify and classify the major groups of factors that must be taken into account when conducting a foreign market research.

Market research is an expensive process and therefore preparing it on international level requires from the researcher to take into consideration a number of factors.

• Is the data needed for the company operation and what are the alternative sources of obtaining it?

• Can certain information be obtained through secondary sources which are less expensive?

• The issue of reliability of data - is the source credible or is there a chance that they were some how altered for certain purposes of the organization who collected it. We should know who and why collected certain data, what was the methodology and wheatear they are in line with other sources

• Statistical accuracy - was the sample on which the data was collected a representative so the notion can be expanded to whole population?

• Classification of data - it may be too roughly aggregated to be useful on micro level.

• Comparability of the data - one should be aware of the specifics of national statistics and definitions which may differ from those on other markets, eg the definition of supermarket or urban area.

• Cultural biases - important while conducting secondary research - certain topics will not be discussed with strangers, language barriers, educational level etc.

Chapter 7

Question 2

According to Hofstede and Hall, Asians are (a) more group oriented (b) more family oriented and (c) more concerned with social status. How might such orientations affect the way you market your product to Asian consumers?

Cultural aspects still play the great role in the way a company approaches its clients on different markets. The strategy is a compromise of those various and very subtle factors.

In case of Asian cultures, group orientation means that the marketing communication on a particular product should emphasize that by buying a particular product a person will reach higher level of integration with the group, more harmony. The benefits to whole group should be in focus, rather than those of an individual. For contrast - in Western culture the fact that the product makes its owner a unique person would be far more effective.

Family orientation is easier to tackle as there are more family concerned groups in all markets. However, the marketer should now how the family orientation is expressed and what it means to an individual to use it properly in the communication.

The great concern with social status also plays a vital role - a consumer will not buy a product - even if it is affordable - if they think it is not proper for their status. The implication for the multinational company is that it should very precisely determine the target group and design the communication in way that does not cause a discomfort to a consumer. If it is needed, there should be slightly altered products with different communications for different segments.

Question 3 - missing

Question 5

What layers of culture have the strongest influence on business people's behaviour? (page 219)

We can distinguish between 4 different layers of culture that can be viewed from a `nesting' perspective. The national culture determines the values that influence business/industry culture, which then determines the culture of the individual company that influences the individual behaviour of a decision maker. From this perspective one can see that all the layers influence business people. They were brought up in their national culture and it is already ingrained in their behaviour. The business/ industry culture and the culture of the individual company are a kind of modification/ add-on to the national culture. Especially when it comes to business people it is the business culture that has the most impact on the way they behave when conducting businesses. Business/ industry culture is very much related to a branch of industry, and this culture of business behaviour is and ethics is similar across borders - this is what makes it easier to conduct cross- border business and there fore influences business people's behaviour in situations of conducting businesses with other companies from a given industry. Business people's behaviour is also highly influenced by the company that they work for culture. This culture is a kind of functional culture and is expressed through the shared values, beliefs, meanings and behaviours of the members of a function with in an organization (e.g. marketing, finance, shipping, purchasing, top management).

Question 6

The focus of the chapter has mainly been the influence of culture on international marketing strategies. Try also to discuss the potential influences of marketing on cultures. (this one is actually an open question because there was nothing explicitly about it in the chapter )

It is not only culture that is influencing marketing projects but also marketing that makes an impact on the way culture is developing. International brands have a huge impact on the consumer behaviour and culture. For instance, the arrival of McDonalds and KFC in Asian countries has actually impacted the eating habits of the population - especially the youth. Soft drinks like Coke and Pepsi have almost wiped out local players. Resulting in an obese population that will in the next 30 to 40 years suffer dearly of this intake of produced foods and fats, diseases of the heart and arteries, strokes etc.
Our CULTURE of eating has therefore been completely turned upside down.

MORE IDEAS: corporate-led globalization and the effect s of large corporations like Nike, Wal-Mart, Disney etc. on how we perceive the world around us.

Other idea: you can speak about Social Marketing planning, execution and evaluation of programmes to influence the voluntary behaviour of target audiences in order to improve their personal welfare ( e.g. encouraging people to give up smoking)

Chapter 8

Question 1, 3, 5 - missing

Chapter 9

Question 1 - missing

Chapter 10

Question 1, 5, - missing

Question 8

The focus of the chapter has mainly been the influence of culture on international marketing strategies. Try also to discuss the potential influences of marketing on cultures. (this one is actually an open question because there was nothing explicitly about it in the chapter )

It is not only culture that is influencing marketing projects but also marketing that makes an impact on the way culture is developing. International brands have a huge impact on the consumer behaviour and culture. For instance, the arrival of McDonalds and KFC in Asian countries has actually impacted the eating habits of the population - especially the youth. Soft drinks like Coke and Pepsi have almost wiped out local players. Resulting in an obese population that will in the next 30 to 40 years suffer dearly of this intake of produced foods and fats, diseases of the heart and arteries, strokes etc.
Our CULTURE of eating has therefore been completely turned upside down.

MORE IDEAS: corporate-led globalization and the effect s of large corporations like Nike, Wal-Mart, Disney etc. on how we perceive the world around us.

Other idea: you can speak about Social Marketing planning, execution and evaluation of programmes to influence the voluntary behaviour of target audiences in order to improve their personal welfare ( e.g. encouraging people to give up smoking)

Chapter 11

Question 1

Why are joint ventures preferred by host countries as an entry strategy for foreign firms?

Reasons for setting up a joint venture

• Complementary technology or management skills provided by the partners can lead to new opportunities in existing sectors

• Many firms find that partners in the host country can increase the speed of market entry

• Many less developed countries, such as China and south Korea try to restrict foreign ownership

• Global operations in R&D and production are prohibitively expensive but are necessary to achieve competitive advantage

Joint ventures are formed because of variety of reasons, entering new markets, reducing manufacturing costs and developing and diffusing new technologies rapidly. To accelerate product introduction and to overcome legal and trade barriers expeditiously

Contract manufacturing enables the firm to have foreign sourcing without making final commitment.

Question 3

Under what circumstances should franchising be considered? How do these circumstances vary from those leading to licensing.

Franchising = to be free from servitude

To types of franchising

1. Product and trade name franchising. This is very similar to trade mark licensing. Typically is a distrubution system in which suppliers make contracts with the dealers to buy or sell product lines. Dealers use the trade name trade mark and product line. Examples are coca cola and Pepsi.

2. Business format package franchising.

The package can contain the following items.

• Trade mark trade names

• Copyrights

• Designs

• Patens

• Trade secrets

• Business know how

• Geographic exclusivity

• Design of the store

• Market research for the area

• Location selection

Franchise systems combine the advantages from economy of scale offered by the franchisor with the local knowledge and entrepreneutial talents of the franchisee

Chapter 12

Question 2

What are a firm's major motives in deciding to establish manufacturing facilities in a foreign country?

To save costs as:

• Labour

• Raw materials

• Transport (especially if a manufacturing company is located in the proximity to buyers)

To avoid government restrictions

To gain new business - provided that a foreign country (where the manufacturing facilities are transferred) is also a place where produced goods are sold at the same time eg., local production demonstrate strong commitment and is the an effective way to persuade customers to buy the products, as service and reliability and attachment to local products are often the main factors when making purchasing decisions

Question 5 - missing

Chapter 13

Question 1

More and more companies are buying their parts, components and other supplies from international subcontractors. There are several reasons for such state of affairs:

1) concentration on in-house core competences - a contractor wants to concentrate management time and effort on those core business activities that make the best use of skills and resources; there may also be difficulties in obtaining suitably skilled labour in-house

2) lower production costs - in many cases the subcontractor produces components for other customers and that's why he can obtain lower production costs per unit (economies of scale); the labour costs involved in the domestic country can make the operation uneconomic and motivate international outsourcing (lower wage costs)

3) general cost efficiency - if a company wants to be more cost efficient than its competitors it has to minimize the total cost towards the end customer; that's why it should outsource some elements of supply chain

4) increased potential for innovation - ideas for innovation can be generated by the subcontractor due to its more in-depth understanding of the component

5) fluctuating demand

Chapter 14

Question 5

Describe briefly the IPLC (International product life cycle) theory and its marketing implications.

The IPLC theory describes the diffusion process of an innovation across national boundaries.

For each curve net export results when the curve is above the horizontal line. If the curve is below the horizontal line net import results for a particular country. Normally, demand first grows in the innovating country (here the US). In the beginning excess production in the innovating country (greater than domestic demand will be exported to other advanced countries where demand also grows. Later demand begins in less developed countries (LDCs).Production, consequently, takes place first in the innovating country. As the product matures and technology is diffused production occurs in other industrialized countries and then in less developed countries . Comparative advantages shift from developed countries to

developing countries. Finally, advanced countries , no longer cost effective, import products from their former customers.

Examples of typical IPLCs can be found in the textile industry and the computer/software industry. For instance many software programs today are made in Bangalore, India.

In foreign markets the time span for a product to pass through a stage may vary from market to market. Due to different economic levels in different countries a specific product can be in different PLC stages in different countries.

Question 6

What are the requirements that must be met so that commodity can effectively be transformed into a branded product?

We brand our products to distinguish a company s offering and differentiate one particular product from its competitors and also create identification and product awareness. There are few requirements for commodity to become a brand products . Firstly it has to have original , registered brand name and logo, which distinguished it from the competitors. The physical components of product such us shape, package also need to be on the place. Then Product need to set its own ever-increasing standards and high quality( which should be sustained)

This is one of the most important things that will differentiate our goods- guarantee of a certain level of quality and satisfaction while purchasing our goods. There is a need to create and sustain brand image and brand essence the values associated with our product a brand image and one core concept which defines our brand. The after sale service is also crucial, so the customers will know that you want to cooperate with them and satisfy their needs in the most appropriate way. It is also very essential to need to Give meaning to the brand and form your own language, behaviour, style in order to create the brand awareness , gain consumers and in the future sustain their loyalty.

Question 9

What is the importance of ' country of origin' in international product marketing?

The country of origin of a product, typically communicated by the phrase 'made in...', has a considerable influence on the quality perception of that product. Some countries have a good reputation and others have a poor reputation for certain products (e.g. Japan & Germany- good reputations for producing cars). The country-of-origin effects are especially critical among eastern European consumers (Russian, polish & Hungarian customers evaluated domestically produced television products much lower than western-made products).

The country of origin is more important than the brand name & can be viewed as good news for western firms that are attempting to penetrate the eastern European region with imports whose brand name is not yet familiar. Another study showed that some products from Eastern Europe have done well in the West, despite negative country-of-origin perceptions (e.g. Belarus tractors have sold well in EU and USA not only because of their reasonable price but also because of their ruggedness). When considering the implications of product positioning it is important to realize that positioning can vary from market to market, because the target customers for the product differ from country to country. In confirming the positioning of a product or service in a specific market or region it is therefore necessary to establish in the consumer's perception exactly what the product stands for and how it differs from existing & potential competition. In developing a market-specific product positioning the firm can focus upon one or more elements of the total product offer, so the differentiation might be based upon price & quality, one or more attributes, a specific application, a target consumer or direct comparison with one competitor.

Question 11

What is the importance of ' country of origin' in international product marketing?

The country of origin of a product, typically communicated by the phrase 'made in...', has a considerable influence on the quality perception of that product. Some countries have a good reputation and others have a poor reputation for certain products (e.g. Japan & Germany- good reputations for producing cars). The country-of-origin effects are especially critical among eastern European consumers (Russian, polish & Hungarian customers evaluated domestically produced television products much lower than western-made products).

The country of origin is more important than the brand name & can be viewed as good news for western firms that are attempting to penetrate the eastern European region with imports whose brand name is not yet familiar. Another study showed that some products from Eastern Europe have done well in the West, despite negative country-of-origin perceptions (e.g. Belarus tractors have sold well in EU and USA not only because of their reasonable price but also because of their ruggedness). When considering the implications of product positioning it is important to realize that positioning can vary from market to market, because the target customers for the product differ from country to country. In confirming the positioning of a product or service in a specific market or region it is therefore necessary to establish in the consumer's perception exactly what the product stands for and how it differs from existing & potential competition. In developing a market-specific product positioning the firm can focus upon one or more elements of the total product offer, so the differentiation might be based upon price & quality, one or more attributes, a specific application, a target consumer or direct comparison with one competitor.

Question 14

What are characteristics of a good brand name?

-brand awareness

-a simple, memorable name

-it is Essential to build emotional ties between consumer and the product

-characteristic trademark

-strong brand promise(f .e. products of a good quality)

-well developed R&D , to keep up with the innovations

Nowadays, the consumers buy "the brand" instead of the product. That's why it is so important to build strong, recognizable brand name.

Chapter 15

Question 1

What are the major causes of international price escalation. Suggest possible courses of action to deal with this problem.

Price escalation - all cost factors (e.g. firm's net ex-works price, shipping costs, tariffs, distributor mark-up) in the distribution channel add up and lead to price escalation. The longer the distribution channel, the higher the final price in the foreign market.

Major causes for this problem are product factors (such as unique and innovative features of the product-quality, availability of substitutes, stage in product life-cycle, place in product line, product positioning, product cost structure-manufacturing, experience effects). The level of price escalation depends on:

• whether the product is a service or a manufactured commodity good sold into consumer or industrial market

• the extent to which the organization has to adapt or modify the product or service

• level to which market requires service around the core product

• estimating how rivals will react to the setting of a specific price (knowledge of other's costs helps in assessment of competitors' reactions)

• channel length, intermediary factors and logistical costs, additional shipping, insurance, selling to foreign market

Price escalation affects all firms involved in cross-border transactions. Companies that undertake substantial intracompany shipment of goods and materials across national borders are exposed to many additional charges.

How to deal with Price escalation?

1. rationalizing the distribution process, reduce the number of links by doing more in-house or by circumventing some channel members

2. lowering the export price from the factory (firm's net price) by reducing multiplier effect of all the mark-ups

3. establishing local production of the product within the export market to eliminate some of the costs.

4. pressuring channel members to accept lower profit margins (appropriate if intermediaries are dependent on the manufacturer for much of their turnover)

Question 6

International Product Life Cycle (PLC) has great influence on price changes.

PLC requires price changes strategy or experience curve pricing. Price changes on existing products are called for when a new product has been launched. New, innovative product which is in its development stage, needs more promotional efforts and advertising campaigns what influences higher initial price. In the second - growth stage product is less unique, demand is lower so price has to be reduced in order to reach people who couldn't afford it earlier. Product faces stronger competition and is aimed at a border segment of the market. As the product matures more pressure is being put on the price to keep the product competitive because of increased competition and less possibility of differentation. Export on foreign markets is starting, what automatically rises costs.

Experience curve pricing is a combination of the experience curve (lowering costs per unit with accumulated production of the product) with typical market price development within an industry.

After the introduction stage (during part of which the price is below the total units costs) profit begins to flow, because supply is lower than demand, prices do not fall as quickly as costs. Consequently the gap between costs and prices widens and creates an umbrella, what attracts new competitors. At some point an umbrella will be folded by one or more competitors who reduce the price in an attempt to gain or retain market share. The result is that a shake-out phase will begin. Inefficient producers will be shaken out by rapidly falling market prices and only those with competitive price/ cost relationship will remain.

Chapter 16

Question 1

discuss current distribution trends in world markets

Over the next few years the challenges and opportunities for channel management will multiply , as technological developments accelerate channel evolution.

Frequently there may be a chain of intermediaries, each passing the product down the chain to the next organization, before it finally reaches the consumer or end-user. This process is known as the 'distribution chain' or the 'channel.' Each of the elements in these chains will have their own specific needs, which the producer must take into account, along with those of the all-important end-user.

There have also been some innovations in the distribution of services. For example, there has been an increase in franchising and in rental services - the latter offering anything from televisions through tools. There has also been some evidence of service integration, with services linking together, particularly in the travel and tourism sectors. For example, links now exist between airlines, hotels and car rental services. In addition, there has been a significant increase in retail outlets for the service sector. Outlets such as estate agencies and building society offices are crowding out traditional grocers from major shopping areas.

There are external dominants of channel decisions:

1.Customer characteristics-customer is the key in any channel design. Thus the size , geographic distribution, shopping habits , outlet preferences and usage patterns of customer groups must be taken into account when making distribution decisions.

2.Product characteristics determinates distribution strategy. The requirement for low-priced , high- turnover convenience products is an intensive distribution network. Transportation and warehousing costs are also very important in the distribution.

3.product perception of the target audience in the society can modify distribution channel. The geography of a country and the development of infrastructure can also affect the channel.

4.the channel used by competing products and close substitutes are important because customers generally expect to find particular products in particular outlets.

5.a country may have specific laws that rule out the use of particular channels or intermediaries.

Question 2

What are the factors that affect the length, width and number of marketing channels? 16.2, 16.3

Customer characteristics are most important in designing channels. These are: the number of potential customers, geographic distribution, outlet preferences, shopping habits, usage patterns of customer groups. (For example the greater the number of customers, the more geographically dispersed they are and the smaller quantities a single customer buys =>the longer the marketing channel.)

Nature of product: examples: low priced, high turnover convenience product => intensive (long, wide, numerous outlets) distribution network; prestigious product => short and narrow distribution channel. Transportation and warehousing costs (important especially in distribution of industrial products), product's durability, ease of adulteration (faking a product), amount and type of customer service required, unit costs and special storage requirements all influence the length, width and number of marketing channels.

Nature of demand/location: the perceptions that the target customers hold about particular products, customer's income and product experience, the product's end use, its life cycle position, the country's stage of economic development, its geography and transportation infrastructure all affect the channel decision.

Competition: competing channel arrangements (of similar products, substitutes, as customers are accustomed to finding particular products in particular outlets), exclusivity agreements with major wholesalers, developing completely different distribution approach to develop a competitive advantage.

Legal regulations/local business practices: specific laws concerning for example: the use of particular channels or intermediaries, exclusive representation; longer and wider distribution channel as a result of local business practices interfering with efficiency and productivity.

The width of a channel (the geographical areas or the number of outlets; wide channel- intensive distribution, many intermediaries; narrow channel- exclusive distribution, few intermediaries) is also affected by: product type, its life cycle, its price, brand loyalty, purchase frequency, product uniqueness, selling requirements, technical complexity, service requirements.(best to look at figure 16.5 on p. 512)

Channel length (the number of levels or different types of intermediaries)is also affected by: the type of a product, distribution type, historical and social factors, and the willingness of a manufacturer to control marketing of a product (the more intermediaries there are, the less control the manufacturer has over it).

Question 5

Do grey marketers serve useful marketing functions for consumers and manufacturers? 16.8

Grey marketing (parallel importing; importing and selling of products through unauthorized distribution channels, occurs when manufacturers use different prices of a product for different markets, grey markets mainly exist for high-priced, high-end products- fashion, luxury apparel)

Grey marketers do not serve useful marketing functions neither for consumers nor for manufacturers. They usually compete only on price and pay little attention to providing marketing support and after-sales service. Authorized intermediaries are losing motivation, as they cannot compete with wholesalers who are offering lower prices. Only retailers in high-price country are making profit out of it. The end-consumers have to pay the same price, no matter from whom and for how much the retailer bought the product. However, it sometimes happens that a manufacturer itself will sell into the grey market as salespeople struggle to meet quotas or managers attempt to cover costs or make year-end sales goals. Then it may be said that grey marketers serve some marketing functions for manufacturers.

Question 6

Why is physical distribution important to the success of global marketing?

Physical distribution - the movement of the firm's finished products to its customers. It includes order handling, transportation, inventory and storage/warehousing.

Physical distribution is the key element in logistics. As it accounts for a significant part of the costs (especially in the situation of global marketing, when the producer enters numerous markets and the costs are huge) , smart decisions in this area enable to make cost savings through efficiency.

A reliable communication system will help to shorten order cycles by quick processing of orders. Then, choosing an appropriate transportation mode ( i.e. water transportation of coal or oil) definitely cuts costs. Moreover, establishing a right order cycle time and customer service levels will have a big impact on the expenditure. Furthermore international inventories can be used as a tool in hedging against currency valuation changes or inflation.

So, all the factors mentioned above influence general costs of the marketing. They also create the image of a product (i.e. through

packaging) and therefore contribute to the success of global marketing.

Chapter 17

Question 1

Identify & discuss problems associated with assessing advertising effectiveness in foreign markets!

Function of communication: communicate with buyers to give them information they need to make a purchasing decision sellers try to persuade buyers to buy their product

Main problem when going international with advertisement:

Degree of standardization/adaptation?

Standardization: reducing ads-costs increasing profitability

-ads are mostly influenced by sociocultural behaviour of consumers in different countries

- advertisement has to be adjusted to a certain extent in each country

- some communication tools (especially personal selling), have to be localized to fit conditions of individual markets

- distribution channel members are normally located within a country so it easier to reach customers

- decisions concerning recruitment, training, motivation, evaluation of salespeople have to be made at the local level

- buyer-seller-relationship has to start obligatory with sellers initiative

- key attributes of effective marketing communication

4 elements of effective communication: sender, message, channel/medium, receiver

problems in international markets: 'noise' & 'influencing factors'

• sometimes audience cannot hear clearly what sender (=seller) wants to say because of the „noise“ of competing producers making similar or contradictory claims about their products

• medium should fit to message (e.g. a long wordy message is better for press than for TV)

• language differences: trade names, sales presentations or ads used in domestic markets sometimes need to be changed when used in foreign markets, not just adapted and translated

• economic differences: e.g. people in developing countries don't have TV's at home this communication channel would not be as effective as visual or oral communication (radio, billboards etc.)

• sociocultural differences: culture affects how individuals perceive and interpret signals & symbols

e.g. in Asia white colour is associated with funerals/sadness, not with cleanness so ads for washing powder have to be adjusted

• legal/regulatory conditions: many governments maintain high regulations on content, language and sexism in advertising

• competitive differences: number, size, type, promotional strategies of competitors are varying from country to country

• Tools for promotion mix:

• Advertising

• Personal selling

• Exhibition

• Sales promotions

• Public relations (PR)

• Direct marketing

Advertising

• is favourable for small-volume customers who can be reached through mass media

• less important for B2B customers

• budget decisions:

• percentage of sales method: the firm allocates automatically a fixed percentage of sales/earnings to advertising budget

disadvantages:

-it uses historical rather than future performance;

-it ignores possibility of necessary extra spending when sales are decreasing, to make a ´recycle´ in product life cycle

-it ignores variations in the firm's marketing goals across countries

-it cannot be used to launch new products or enter new markets (zero sales = zero ads)

• competitive parity approach: duplicating the amounts spent on ads by major rivals

disadvantages:

-practice of competitor are not necessarily right

-firm is in different situations and different markets; in a new market the relationships are different

• creative strategy / message decisions =unique selling proposition (USP):

it is the crucial sales argument for customers to buy a product problematical

abroad

• media decisions

-key question: use a mass or target approach

-mass media (TV, radio, news print) is effective when a significant percentage of the public are potential customers

-media availability and importance differs in all countries, thus plans may require adjustment in cross-border campaigns

-high reach is necessary when market or product is new

-impact: depends on compatibility between the used medium and the message

GRP (gross rating points) represents the percentage of the target audience reached

by an advertisement; indicates the 'critical mass' of a media effort

(compatibility & critical mass should be as huge as possible when ad is internationalizing)

-media types:

• TV

-expensive; commonly used medium to reach broad national markets

-problem abroad: most regulated media of national governments

• Radio

-lower cost than TV

-is often transmitted on a local basis, so national campaigns have to build up on an area-by-area basis

• Newspapers (print)

-in most countries there is 1 or 2 dominant newspaper with national circulation

• Magazines (print)

-reach specific segments of the population

• cinema

-audience is truly captive (no TV-channel hopping)

• outdoor advertising

=posters/billboards, shop signs, transit advertising (=e.g. ads on a public bus)

Public relations

= a kind of word-of-mouth advertising

• cheap & very effective

• seeks to strengthen corporate image and influence favourable media treatment

• is directed towards an influential but relatively small target audience of journalists (who work for newspapers/magazines) inexpensive

• but still vast target groups customers, employees, stake-, shareholders, suppliers, general public

• problem (especially abroad): it depends on journalists how material will be used

result can be an unfavourable story

not favourable when do not have any contacts abroad yet

Sales promotion

= leaflets/flyers, free trials, point-of-sale displays, demonstrations, premiums ('2 for 1'), price discounts, cash back deals, coupons, catalogues, gifts

• translations should be done in cooperation with overseas agents to avoid misunderstandings

Direct marketing

• mail, telephone selling, personal visit

• direct mail:

• can be adressed exclusively to the target market

• it will be some time before competitors realize that the firm has launched a campaign

• no media space or airtime restrictions

• problem in foreign market: preparation of a suitable mailing list (marketing database) & response to direct mail is weak

• telephone-marketing:

• to obtain orders & for fast low-cost market research

• international telemarketing requires the use of a agency, because language skills are required and experience in identifying decision makers in target firms

Personal selling

• immediate feedback; relatively less 'noise'

• expensive so mainly used for B2B or for expensive & durable products (e.g. cars)

more personal selling in countries with low labour costs

Viral Marketing

= online word-of-mouth marketing technique

• takes advantage of social networks to increase brand awareness

• email; sms; forums; blogs; podcasts; virtual networks/communities; chatrooms

• useful in reaching a large number of people rapidly; very inexpensive

• content must be compelling, avoke a response; fun i soften a part of it

• personal recommendation is more powerful than any ad-campaign

• customers recommend to friends friend tell friends tell friends...

viral marketing's strength is based on the fact that people are more likely t respond to a marketing message or take interest in a product i fit comes in attachment of friend

e.g. Hotmail's email practice of attaching advertising to outgoing emails from its users

-disadvantages:

-if done improperly it can backfire and create negative buzz

-anti-virus-software or firewalls can prevent people from receiving or viewing such

attachments

Question 2, 3, 5 - missing

Chapter 18

Question 1

1. Explain why the negotiation process abroad may differ from country to country.

Negotiation is a key step in the company's expansion process. If the negotiation lead, in a good mood, to an agreement, this may, for example, suppose for the firm a new alliance in order to produce more or a partner abroad in order to launch its product in a new market. Sometimes, negotiations also let solve misunderstood between two firms.

There are several definitions of negotiation, but we considerer now the concept given by Harris and Moran (1987): process in which two or more entities come together to discuss common and conflicting interests in order to reach an agreement of mutual benefit.

The way in which a negotiation is conducted depends a lot on the negotiators´ cultures: their education, way to understand the business, etc. For that reason, when a negotiation is conducted in an international context (for example, between two companies from different countries), this factor become more relevant: we need to remember that culture differences among countries could be really high.

For that reason it is convenient that before engage a negotiation with an international firm, we should analyze some key features that could have positive/negative impact it the process. Sometimes stereotypes are used, but this is not a really serious analysis.

In order to understand better why and how these differences appear, we can focus in the study made by Hofstedes, who identifies five factors that are the key of the differences between one country and other in the negotiation process.

First of all, it is needed to identify if the country is more masculine or feminine tendent. If the country's culture is masculine, the negotiation, for example, could be identify as a zero sum game, and the process could be more violent. If the culture is more feminine, compressiveness and look for bilateral agreements could be more often in the process.

He also identifies uncertainty avoidance as another key factor. In high uncertainty avoidance cultures, the process it is often more burocratic and slower. If this is not the case, negotiators prefer a more informal process, and quicker.

The third factor is power distance. Some countries with high power distance (Japan, Russia, Korea...) the process is conducted by firms directives, with more rituals and protocol. If not, the process is conducted by specialists, which are closer to the problem.

Individualism and collectivism is the fourth element of the model. Individualist cultures are often selfish, whereas a collectivism cultures usually look for cooperative behaviours.

The last factor we can identify is the organizational model of the particular country. For example, British model is more flexible ad democratic; German model is well organized, and used to set very clearly and specific rules; French model follows a pyramidal hierarchical.

All those dimensions create a unique framework for each country, and should be taken into account if international negotiators want to achieve their goals.

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