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Session 13: International Marketing in a Global Context - Coggle Diagram
Session 13: International Marketing in a Global Context
Reading 20 Notes
"International Marketing - the global marketplace"
The Global Marketplace
MNC
- a firm that has the power to coordinate and control operations in more than one country (Dicken, 2011, p. 110).
Global Firm
- a firm that, by operating in more than one country, gains R&D, production, marketing and financial advantages in its costs and reputation that are not available to purely domestic competitor
(Kotler and Armstrong, 2016, p. 595).
Globalisation
- greater permeability and interdependence across national boundaries and is an economic, political and cultural phenomenon
(Winchester, 2015).
Orgs needs to analyse the global marketing environment, own strengths and weaknesses and opportunities and threats.
Triggers for International Expansion
(Jobber and Ellis-Chadwick, 2013)
Saturated domestic markets
- limited opportunities in an organisations' domestic market.
Small domestic markets
- larger markets are necessary for survival where the scope of domestic markets is too small.
Low growth domestic markets
- economic recession in an orgs domestic market can motivate it to seek markets overseas.
Customer drivers
- expectations by customers for the orgs to have a global presence or to serve customers who have themselves expanded globally.
Competitive Forces
- competitors provoke orgs to follow suit or to compete against global orgs encroaching on an orgs domestic market.
Cost Factors
- reduce its costs by taking advantage of lower energy, labour or raw materials costs abroad, or seeking benefits from economies of scale.
Portfolio Balance
- allows temporarily unfavourable conditions in one country to be offset by more favourable ones in others.
Macro Environment
Factors to consider when expanding globally...
Trading systems
- govs and trading blocs try to protect domestic companies, control trade and raise revenues, may impose charges on foreign companies and trade. But other trading bodies can encourage trade such as WTO.
Socio-cultural considerations
- easier for an org to operate in countries that are socially and culturally similar to domestic market.
Technological considerations
- level of tech development in a country can affect the viability of operating in it i.e. efficiency of operations and market potential.
Economic considerations
- economic development, income distributions, employment levels, exchange rate, transport and comms infrastructure etc...
Political and Legal considerations
- countries vary in political stability and level of regulation which can affect their attractiveness to companies considering trading in them. Countries seek to protect their own economic interests.
Ethical considerations
- any ethical issues in an orgs operations in less developed countries can be damaging for reputation and business.
Micro Environment
Need to consider market's attractiveness to own orgs capabilities.
Market factors to consider...
(Jobber and Ellis-Chadwick, 2013)
Market size and growth rate
- important for predicting future demand.
Competition
- strength and volatility of compeititon.
Cost of serving the market
- principal costs include distribution and control, labour and marketing expenditure.
Profit potential
- market may limit the potential for profit.
Market Access
- existing links between suppliers, distributors and customers may restrict access to a market.
Org capability factors to consider
(Jobber and Ellis-Chadwick, 2013
Skills
- does an org already have or can buy in the necessary skills to market abroad?
Resources
- does an org have the necessary resources to service the market to compete?
Product Adaptation
- can the offering be adapted to the needs of the market?
Competitive Advantage
- does the org have a competitive advantage in the market?
Reading 21 Notes
"Entering and Operating in International Markets"
Modes of Entry
Indirect Exporting
- exporting indirectly through an independent org based in the orgs domestic market, by buying its goods to sell abroad, selling on behalf of the org, allowing the org to use its distribution (Jobber and Ellis-Chadwick, 2013)
Direct Exporting -
exports offerings itself and manages contracts in its international markets, transportation, documentation and marketing mix. (Jobber and Ellis-Chadwick, 2013)
Joint-ventures
- two or more orgs forming a partnership, in which the costs, risks and profits are shared between the domestic and foreign orgs. If they create a separate entity, it is called an equity joint venture (Jobber and Ellis-Chadwick, 2013).
Strategic Alliance
- cooperation between two or more corporations, belonging to different countries, whereby each seeks to add to its competencies by combining resources with those of its partner (Jain, 1987, cited in Dibb et al..., 2016, p. 125).
Global Strategic Partnerships
- link-ups between companies from two or more regions which jointly decide to pursue a marketing opportunity, share resources and combine ideas, common in high technology, automotive and power technology industries (Dibb et al..., 2016, p. 125).
Licensing
- selling the rights to use its technology, patent, trademark or know-how to one of more orgs in foreign markets for an agreed time period in exchange for royalty payments based on the volume of sales or other metric.
Franchising
- a type of licensing where companies in foreign markets pay to use the product or trade name. This allows an org to enter a market using resources and local knowledge supplied by the franchises.
Management Contracting
- export of management services rather than products, domestic org supplies the know-how and the foreign org provides the capital (Kotler and Armstrong, 2016).
Contract Management
- contracting a manufacturer in a foreign market to produce an orgs product or service (Kotler and Armstrong, 2016)
Direct Investment
- greatest level of commitment to a foreign market and the highest level of control through ownership of foreign subsidiary or division.
Globalisation vs Customisation
Orgs have come to recognise that they have to adapt their offerings and comms to local preferences and conditions.
Globalisation involves permeability across borders of more than just goods and services, involves social and cultural trends. Orgs need to to decide how much they can standardise their approach when entering different foreign markets.
Orgs might need to invent a new product for an international market.
Marketing comms need to be adapted. Some advertisements may not be suitable for all audiences.
Distribution networks can vary in different international markets, depending on local customs and infrastructure.
Orgs need to consider the characteristics of 3 main market segments:
Premium segment -
customers with high purchasing power, a willingness to pay for internationally admired brands and seeking high value products with advanced features.
Middle-market segment
- customers with mid-level income seeking value and choosing products with a 'good enough' performance vs price ratio.
Low-end segment
- customers only able to pay for basic products at a meagre price.