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Launching a new product / brand in the

European / International Markets

How to introduce a new product / brand

in the European or international markets?

International marketing plans

Analyze the market (define market potential)

Segment the market and identify the right segment

(segmentation and positioning)

Evaluate the attractiveness of the segment (quantitative

and qualitative evaluation)

Developing the marketing mix

Case discussion

Case discussions

Barilla

Dunkin Donuts

De Longhi

…and many others

Marketing Plan for international

marketing

Selling is only the tip of the iceberg

‗There will always be need for

some selling. But the aim of marketing

is to make selling superfluous. The aim

of marketing is to know and understand

the customer so well that the product or

service fits him and sells itself. Ideally,

marketing should result in a customer

who is ready to buy. All that should be

needed is to make the product or

service available’.

Peter Drucker

The 7Ps of the marketing mix

MARKETING PLAN – PRODUCT / MARKET / YEARS

EXTERNAL ANALYSIS

INTERNAL ANALYSIS

MARKETING STRATEGY MARKETING MIX

Demand Market System

CompetitorsSegmentation

Macro environmentBuying Behavior

Operational Processes

EconomicsMarketing

Threats

WeaknessesStrenghts

Opportunities

OBJECTIVES

TARGET GROUP

COMPETITIVE

STRATEGY

POSITIONING

PRODUCT /

SERVICE

PROMOTION

CONTROL

The marketing budget

Gross sales value: p x q

- Trade Allowances

= Net product sales

- Direct delivered costs (production, distribution, etc.)

= Gross Profit

- Marketing appropriations

- Marketing research costs

- Communication costs

= Profit Before Indirects (PBI)

Top line objectives

(efficacy)

Bottom line objectives

(efficiency)

Which are the differences in the marketing plan of...

An exporting company?

A multinational company?

A global company?

EXPORT MARKETING PLAN – PRODUCT / MARKET / YEARS

EXTERNAL ANALYSIS

INTERNAL ANALYSIS

CompetitorsInternational

Segmentation

EconomicsMarketing

Threats

WeaknessesStrenghts

Opportunities

OBJECTIVES

TARGET GROUP

COMPETITIVE

STRATEGY

POSITIONING

PRODUCT /

SERVICE

Standardization/

Adaptation

Standardization

/ Adaptation

Standardization

/ Adaptation

PROMOTION

Standardization

/ Adaptation

CONTROL

ENTRY MODE

MULTINATIONAL MARKETING PLAN – PRODUCT / MARKET / YEARS

EXTERNAL ANALYSIS

INTERNAL ANALYSIS

CompetitorsSegmentation

EconomicsMarketing

Threats

WeaknessesStrenghts

Opportunities

OBJECTIVES

TARGET GROUP

COMPETITIVE

STRATEGY

POSITIONING

PRODUCT /

SERVICE

PROMOTION

CONTROL

GLOBAL MARKETING PLAN – PRODUCT / MARKET / YEARS

EXTERNAL ANALYSIS

INTERNAL ANALYSIS

CompetitorsGlobal

Segmentation

EconomicsMarketing

Threats

WeaknessesStrenghts

Opportunities

OBJECTIVES

TARGET GROUP

(Horizontal segment)

COMPETITIVE

STRATEGY

GLOBAL POSITIONING

GLOBAL

PRODUCT /

SERVICE

GLOBAL

PROMOTION

CONTROL

Adaptation? Adaptation?

Market Potential, Segmentation and

Targeting

The identification of the target countries can be developed through the market attractiveness / competitive strenght matrix

Choice of target markets / countries

Attractiveness of the market

tive p

tion H

High Medium Low

Not interesting Not interesting

Not interesting

Monitoring

MonitoringInvest

Invest

(Grow)

/ Selectivity strategies

Socio - Demographic segmentation

Behavioral segmentation

Psychographic segmentation

Benefit segmentation

Micro – market segmentation (step 5)

based o

tion b

up Traditional format

Creative specialities

Regional specialities

An example:

Individuals

(BtoC)

Companies

(BtoB)

Channels of distribution

Figure 8.4 Segmentation for selling salty snacks’ in the workplace

Source: Adapted from Barron, J. and Hollingshead, J. (2002) Market segmentation work: successful marketing really does begin with effective

segmentation, Marketing Management, January–February: 24–8. Reproduced with permission from J. Barron, J. Hollingshead and the Monitor Group

With horizontal segmentation similar segments in

different countries are aggregated in a unique cluster

Horizontal (intermarket / transnational ) segmentation

is possible when psychografic or benefit segmentation

have been applied in the segmentation of the single

markets

Different weight of country segments within the

horizontal cluster

Horizontal segmentation

An example of horizontal segmentation

Segment 1

Segment 2

Segment 3

Country A

Country B

Country C

Country D

Country E

Horizontal

Segment 1

Horizontal

Segment 2

Horizontal

Segment 3

What is positioning?

Positioning is the act of designing the company’s offering and image to occupy a distinctive

place in the mind of the target market.

Positioning statement

To (target & group need)

Our (Brand)

Is (the concept)

That (what the POD is or does)

Positioning criterias

Benefit / Attributes / Price

Usage situation

Product use

Against competitors

Product Class

Company’s image

Hybrid positioning

Segmentation and positioning: the Accor case

http://www.accor.com/gb/groupe/activites/hotellerie/activites_hotellerie.asp?flash=N

Accor brands: value propositions

Sofitel : French-style luxury

Lenotre: creator of upscale gourmet dining

Groupe Lucien Barrière: a mayor player in the luxury leisure segment

Pullman: Customized solutions for business travelers

Novotel : resolutely contemporary hotels

Mercure: a Mercure for every traveler

Suitehotel: an oasis for today’s nomads

Accor Thalassa: the best of seawater theraphy and hot spring spas

Ibis: the leader in the European economy segment

All Seasons: Hotel that have “all you need”

Novotel : resolutely contemporary hotels

Etap Hotel: hotels for everyone

Formule 1: the benchmark in low cost hotels

Motel 6: affordable & friendly (“we will leave the light on for you”)

Studio 6: Long stay hotels (“extend your stay, not your budget”)

Adagio City Aparthotel : a new network of urban residences (“a home away from home”)

La Compagnie des Wagons-Lits: a leader in onboard catering and services

Understanding competitive structure of a market

How do customers view the brand?

Which competitive brands do customers perceive to be their closest competitors?

What market offering and company attributes are most responsible for these perceived differences?

The Barilla Case

Barilla Video

• In the time of entry, was the positioning strategy different in different countries?

•Today, do you consider Barilla a global brand?

Dunkin Donuts

• Who is the enemy?

Product Decisions

The international

product mix

Many decisions depend on the stage of

the Product Life Cycle

Source: Kotler et al (2009), MM

PLCs of different countriesfor a specific product

Source: Hollensen, 2007, p.431

The PLC of disposable nappies in China

Expo Shanghai, June 2010

kaidangku

The PLC of the Nivea Brand

across different countries

Foreign Countries Italy

Product Life Cycle and advertising across different countries

The three levels of a product

functional features, performance,perceived value, image,

technology

Delivery, installation, guarantees, after-sales service,

spare parts

brand, quality, design, packaging, price,country of origin, staff behaviour, size

Core productbenefits

Productattributes

Support services

Ability to standardize product elements

The trade - off between standardization and adaptation

Product and Service Decisions

Individual Product

Product Line

Product Mix

Key Decisions:

Individual Product Decisions

See Cateora & Graham – Chapter 10

Ito En has launched in Japan a new vegetable based drink. This vegetable concentrated juice

blend, rich in beta-carotene and lycopene, can supply the equivalent of 350g of vegetables

with a 280g bottle, with no added sugar or salt. This product contains 25 different vegetables:

carrots, tomatoes, sweet potato, red bell peppers, green kidney beans, moroheiya, celery,

broccoli, kale, pumpkin, lettuce, green bell peppers, asparagus, Chinese cabbage, sweet potato

stalk and leaf, green peas, mustard spinach, angelica, parsley, cress, cabbage, radish, spinach,

Japanese wild chervil.

There are lots of similar products like this being launched across Japan and the Asia-Pacific.

Even if this product has a huge amount of vegetables and it is undoubtedly healthy, it is

improbable that it would be popular in Europe or the US.

Differences in packaging: the Twix caseFra

...Italy

1. Where are the differences?

2. Why?

(…)Best global brands (Interbrand, 2010)

Branding decisions

Source: Source: adapted from Onkvisit and Shaw, 1993, p. 534.

Remember COO (Country of Origin effect) as an attribute of brandreputation!

Advantages:

better profit margins

brand loyalty

better bargaining power

better control of distribution

Manufacturer’s brand

Disadvantages:

• Requires brand promotion

• difficult for small manufacturer with unknown brands

Advantages:

Possibility of larger

market share

no promotional problems

possibility to increase export business with increasing internationalization of the big retail chains

Private brands

Disadvantages:

• Severe price competition, because the retail chain can always switch supplier

• Lack of market identity

• If the manufacturer is producing both its own brands and private brands, there can be the risk of cannibalization of his brand

Advantages:

Highly profitable business

Fast brand diffusion all over the world

Licensed brand

Disadvantages:

• Risk to lose control over its product

A company can license names and symbols created by

other manufacturers, names of well-known celebrities,

characters from popular movies and goods

Harry Potter pancakes:

a licencing mistakeHarry Potter Lego:

a licencing success

Co-branding between Martini and Dolce e Gabbana:

MARTINI® GOLD by

DOLCE&GABBANA is the result of a

long term affair between two Italian

icons – MARTINI® GOLD and

DOLCE&GABBANA.

Source: http://www.martinigold.com/it-

it/the-movie/advertising-gallery.aspx

Ingredient branding between Dell and Intel:

Brand Strategy

• Line Extension– Existing brand names extended to new forms, sizes,

colors and flavors of an existing product category. Related also to package sizes. Ex: Dannon Yogurt Flavors

• Brand Extension– Existing brand names extended to new or modified

product categories. Ex: Red Bull Energy Drink, Red Bull Cola

• Multibrands– New brand names introduced in the same product

category. Ex: Helena Rubistein, Lancome, Kerastase, Biotherm.

• New Brands– New brand names in new product categories.

Ex: Sanson (by acquisition of Barilla Group)

Advantages:

Maximum market efficiency

Reduction of adv costs

Elimination of brand confusion

Good for culture-free products

Good for prestigious products

Easy identification around the world

Uniform world-wide image

Global brand

Disadvantages:

• Assumes market homogeneity

• Possibility of negative connotation

• Requires quality and quantity consistency

• Legal complications

• Local managers opposition and resentments

Advantages:

Meaningful names

Local identification

Allows variations of quality and quantity across markets

better control of distribution

Local brand

Disadvantages:

• Higher marketing costs

• Higher inventory costs

• Loss of economies of scale

• Diffused image

The Carlsberg Group: Russian Brand Portfolio in 2007

Global productsIs it Coca Cola a global product and brand?

Global products

Is it Unilever icecream a global product and brand?

Distribution Decisions

Consumer marketing channels

Figure 17.11 Consumer and industrial marketing channels

Industrial marketing channels

Figure 17.11 Consumer and industrial marketing channels (continued)

Differences in the distribution system, logistics

and transport infrastructure

External decisions concerning channel structure

Inefficient logistic system use of local intermediaries price escalation

Alternative distribution channels: examples of OTC and beerIn France pharmacies and drugstores distribute 65.7% of the total OTC national

market value and supermarkets and hypermarkets account for only 8.3%; in markets

such as US supermarkets and hypermarkets account for 28.8% and pharamacies

and drugstores distribute 49.1% of the US OTC pharmaceuticals.

Channels Brazil India Singapore Germany Russia

Specialist Retailers 48.60% 56.60% 6.80% 7.30% 30.20%

Supermarkets/ hypermarkets 29.70% 0.20% 17.80% 61.30% 48.10%

On-trade 14.90% 43.10% 63.80% 22.90% 8.80%

Other 6.80% <0.1% 11.60% 8.50% 12.90%

100.0% 100.0% 100.0% 100.0% 100.0%

distribution

worldwide

Source:

www.datamonitor.com

Legal regulations/ local business practices

In China companies such as Mary Kay, Amway and Avon in 1998 were

included in the ban of pyramid selling. After losing 50% of sales, these

companies had to adapt to new regulations which imposed their sales

people also to pass an exam by local authorities.

Product life cycle3.

Size of the market and distribution of consumers

across the country4.

Procter & Gamble (P&G) distribution network in rural China

Purchasing and shopping habits - outlet preferences

Retail formats in Vietnam : one decade after introduction of supermarkets, only

10% of all the products are distributed through modern distribution while the rest 90%

continue to be sold through traditional channels such as:

Organized bazaars: approved by the authorities, crowded, chaotic, colorful, but

also dirty and without product standards nor trademarks)

Informal bazaars (called Cho Coc), not approved by local Vietnamese

government which planned (unsuccessfully) to eliminate them. The retailer is a street

vendor that can be stationary or may move from place to place, typically selling

vegetables, eggs, meat, fish, ecc.

Mom & pop stores: small family owned shops selling consumer stuff such as

food, drinks, toys, personal care products, etc.: in some streets, in a few hundred

meters, there can be 200 – 500 similar mom & pop stores

Competitors

Successful distribution strategies

Exclusive contracts with retailers and wholesalers

Sisheido example:

high-quality counseling and services tailored to the requests of each

consumer, and constantly meeting customer needs for skincare and makeup.

The direct control of the distribution channel

Sources:

http://www.shiseido.co.jp/e/ir/acc/ir_e0804acc/i

mg/brf_08041.pdf;

http://www.shiseido.co.jp/e/ir/annual/index.htm

Internal decisions concerning channel structure

Intensive, selective or exclusive strategy?

Relationship with intermediaries should be differentiated because complex products require extensive information exchange and interaction catering to solve functional problems: product delivery, installation and/or after-sale service, etc. In some cases also top management is involved

How many export managers? Which are their international experiences? Whichare their marketing capacities? Budget? Owned sales network or indepententintermediaries?

Entry mode and degree of control

Distribution strategy and penetration objectives

Product complexity

Internal organization of the export department

Intensive, selective or exclusive strategy? Some examples

Intensive strategy

Michelin Group took an intensive strategy when it entered Russia with its Michelin Truck Pro and Tyre Plus partnerships. Michelin already had 82 existing branches in 61 towns when it decided to extend its sales network in 2006 to every Russian town of 150,000 residents or more in order to provide proper coverage in this vast country.

Fast moving goods manufactured by large multinational companies which aim to penetrate with their brands all the segments of the population.

M = Manufacturer

W= Wholesaler

R = Retailer

Selective strategy

Armani Group, in the apparel sector, which distribute its high quality products not only through directly owned stores (exclusive approach) but also penetrating some countries through the selection of the finest wear stores in the main cities.

M = Manufacturer

W= Wholesaler

R = Retailer

Exclusive strategy

• Zara, the brand of the Spanish Inditex Group. Zara penetrates foreign countries solely through directly owned stores where only the company’s brand is sold.

M = Manufacturer

W= Wholesaler

R = Retailer

Managing international distribution channels

Direct and indirect distribution channels

Conventional versus vertical marketing systems

Multichannel strategies

Conventional marketing system

Manufacturer

Wholesaler

Retailer

Consumer

Vertical marketing system

Types of vertical marketing system

Corporate VMS A vertical marketing system that combines successive stages of

production and distribution under single ownership (examples

are DOS – directly owned stores).

Contractual VMS A vertical marketing system in which independent firms at

different levels of production and distribution join together

through contracts to obtain more economies or sales impact

than they could achieve alone (examples are wholesaler-

sponsored voluntary chains, retailer cooperatives or franchise)

Administrative

A vertical marketing system that coordinates successive stages

of production and distribution, not through common ownership

or contractual ties but through the size and power of one of the

parties.

Multichannel distribution

Companies usually define multiple channels (direct and indirect) and choose the more suitable channel organization (conventional or vertical) often proposing differentiated offers and/or brands.

Distribution channels in l’Oreal:

◦ 25 brands in 130 countries

Multichannel distribution

http://www.careernomics.com/Loreal0709/can/excelling.php

+ Lancome e-shop

Functions performed by intermediaries

Carrying of inventory

Demand generation

Physical distribution

After-sales service

Credit extension to customers

Types of channel intermediaries

Agents: Agents sell supplier-owned products primarily to retailers and other wholesalers, not taking title to goods but acting in name of the company they represent

Wholesalers: Wholesalers sell goods supplied by other firms to retailers and/or directly to industrial, commercial and other end users. They are distinguished from other types of intermediaries in that they actually take title to the goods they sell.

Retailers:

Criteria for evaluation foreign distributors

Source: Cavusgil, Yeoh and Mitri (1995)

Grocery Retailing: the European Mosaic

Selling to Retailers

Manufacturers have to take into consideration the variety of retail intermediaries that can be used in the foreign markets.

Manufacturers can create partnerships with retailers

In some cases they have to develop owned stores and/or franchising networks which are more suitable to promote and sell their brands.

Selling to Retailers: some examples

For example, Bulgari's retail network consists of 264 exclusive Bulgari stores: 107 are DOS (directly owned stores), 44 are franchised stores and 56 are travel retail and wholesale stores). Bulgari also distributes through independent watch retailers and through the finest and selected perfumeries and department stores.

Selling to Retailers: some examples

Pricing considerations

Companies set prices according to 4 sets of

factors:

– costs

– consumer perception

– competitors‘ prices

– societal consideration.

Competitors’ prices

The strenght of local competitors… an example:

Arvind Mills, an Indian company that makes denim jeans

for Lee, Wrangler, Arrow and Tommy Hilfiger - brands

which sell for pound 30 or more in the West. This local

company is also the owner of the biggest selling Indian

jeans brand Ruf and Tuf, which sell its products at just

pound 3 via tailors in the form of a complete "sew it

yourself" kit.[1]

[1] ―The bottom of the pyramid is where the real gold is hidden‖, Marketing

Week. London: Feb 8, 2007. pg. 18,

http://proquest.umi.com.ezproxy.lib.ucf.edu/pqdweb?index=3&sid=6&src

hmode=1&... 16/08/2008

Consumer perception: the de Longhi case

• de Longhi in Europe and USA

• Price positioning

• Advertising (see Video)

1. Is price positioning the same in different European countries?

2. Is this situation the result of company‘s marketing strategies or is it determined by consumer perception?

3. What is the role of recent advertising campaigns in the European market? And in USA

Consumers’ needs: the Nokia case

• de Longhi in Europe and USA

• Price positioning

• Advertising (see Video)

1. Is price positioning the same in different European countries?

2. Is this situation the result of company‘s marketing strategies or is it determined by consumer perception?

3. What is the role of recent advertising campaigns in the European market? And in USA

Contesto socio- economico e politiche di marketing

Nigeria - Nokia 1200

- Multi phonebooks, for multiple users

- Flashlight, to be used when there is a power failure

- Call tracker, to set the time limit of a call

- SMS languages not only in English but also in

Hausa, Igbo, Yoruba, ecc.

14 €

Creating

value for

consumers

Setting prices in an international context: the problem of price escalation

Tactics for

countering price escalation

• Rationalizing the distribution process

• Lowering the export price from the factory

• Establishing local production of the product

• Pressurizing channel members to accept

lower profit margins

Price and the internet

Comparison Shopping for Plasma TV Made Easy with Historic Pricing Charts.

Source: http://www.nextag.com/LG-42PC5D-42-High-540181875/price-history-html

--- Maximum

--- Median

--- Minimum

--- Maximum

--- Median

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Objectives, strategies and pricing policies

There are a number of strategic alternatives or approaches to setting

international prices:

cost versus market based approach

new product pricing: skimming versus penetration pricing

standardization versus adaptation approach

Pricing for new products with

innovative features and benefits:

• Market skimming pricing• Pricing strategy used for new products that have unique

features and benefits over the competition.

• A high price is set for the new product to skim the maximum

price and generate the most profit.

• Market penetration pricing• Initial low price to penetrate the market and convert as many

buyers onto the new product and grab a large market share.

• This is a short-term strategy that is dangerous and needs to be

supported by a robust range of products to leverage against.

Different countries: same price (standardization) or not (differentiation)?

Price dumping

Dumping is defined as selling products in other countries’ markets below cost or

below domestic prices, with the objective of obtaining relevant market shares in

the foreign countries.

However, dumping is controlled by many rules developed both at national (to

hedge local companies against dumping) and international levels. Since the

creation of the WTO in 1995 anti-dumping activities have been strongly

reduced.

Nevertheless anti-dumping investigations are still numerous, with China being

the biggest target

Price dumping: some examples

Global Anti-dumping initiations from 1980 to 2007 (first half)

Source:

http://www.antidumpingpublishing.com/uploaded/documents/CSDocuments/GTP%202007

%20(update%20Oct%202007).pdf

Price dumping: some examples

Main targets of anti-dumping initiations from 1995 to 2006

Source:

http://www.antidumpingpublishing.com/uploaded/documents/CSDocuments/GTP%202007

%20(update%20Oct%202007).pdf

Target Investigations (n°) Target Investigations (n°)

China, P.R. 536 Germany 78

Korea, Rep. of 229 Malaysia 72

United States 175 EU 63

Chinese Taipei 173 Ukraine 59

Japan 135 South Africa 54

Indonesia 130 Italy 44

India 127 Spain 42

Thailand 120 Singapore 41

Russia 101 UK 41

Brazil 92 Mexico 39

Gray marketing / parallel imports

A parallel import occurs when:

- channel members located in low price markets, not under the strict control of the

manufacturer, resell its products to market areas for significantly higher prices.

-In another type of gray marketing, a company manufactures a product in its home-

country market as well as in foreign markets.

In this scenario, products manufactured by the company’s foreign affiliate for sales

abroad are sold by foreign distributors to gray marketers, who bring the products

into the producing company’s home-country market to compete with the

domestically produced goods.

- In both cases, the marketing opportunity that presents itself requires gray market

goods to be priced lower than goods sold by authorized distributors or

domestically produced goods.

Transfer pricing

• Transfer pricing is the price set and paid for products

shipped between units of the same organization.

• The unit can be a division, a foreign subsidiary or a joint

venture. Not only will these prices determine duties and

taxes that are relevant for customs and tax authorities, but

also will they affect the profitability of the divisions

involved in intra-corporate exchange.

• The latter is particularly critical when the foreign unit is an

intermediary, whose financial performance strongly

depends on transfer price levels.

Countertrade

A $ 9 billion barter deal

• The Democratic Republic of Congo is trading with the China Railway

Engineering Corporation, a Chinese state-owned company. The objective

is to plan a new road which will be the first endeavor of the biggest single

deal China‘s ever done in Africa, worth $9 billion.

• DR Congo will benefit from $6 billion of desperately needed infrastructure

— about 2,400 miles of road, 2,000 miles of railway, 32 hospitals, 145

health centers, and two universities. In return, China will receive precious

natural resources to feed its booming industries — 10 million tons of

copper and 400,000 tons of cobalt.

Source: Barter News, $9 Billion Barter Deal, 04/19/2008, retrieved on December 4th from

http://www.barternews.com/9_billion_dollar_barter_deal.htm

Countertrade

Countertrade is an umbrella term which encompasses the

trading/exchange of goods or services without using

currency.

A variety of trading practices are included, from the simple

exchange of goods for goods at an agreed value (barter) to

more complex export transactions.

Promotion and Advertising

Setting the promotion mix

Toyota

• Suggested marketing:

MR2 Sports Car

• Translation in French: M-R-deux

sounded like merde

Mercedes Benz

• Pre-launch marketing: The Vision

GST (Grand Sports Tourer) concept

for a minivan

• In Canada: GST is associated with

the highly unpopular Goods and

Services Tax