TAPPING INTO GLOBAL MARKETS

Group 8Nugraha Ngesti Wibowo

SuhartantoVina Octaryna

Major Decisions in International Marketing

Deciding whether

to go abroad

Deciding which markets to enter

Deciding how to enter the market

Deciding on the marketing program

Deciding on the marketing organization

Deciding Whether to Go Abroad

Better profit opportunities

Needs a larger customer

Reduce dependence on one market

Counterattack global competitors

Customers are going abroad

Four Stages of The Internationalization Process

No regular export activities

Export via independent agents

Establish sales subsidiaries

Establish production facilities abroad

Deciding Which Markets to EnterThe waterfall approach

Gradually entering countries in sequence.

Mode entry : sequential ( Hi-touch, food )

It allows firms to carefully plan expansion and is less likely to strain human and financial resources

The sprinkler approach

Entering many countries simultaneously

Mode entry :simultan ( Hi-tech, electronic )

It better when first-mover advantage is crucial and a high degree of competitive intensity prevails

Choose the countries based on…

Product & Geography

Political Climate

Income & Population

Key Emerging Markets

Brazil

Russia

India

ChinaIndonesia

South Africa

Regional Free Trade Zones

MERCOSUL

ASEAN

NAFTA

APEC

European Union

Desired Country Characteristics for Market Entry

Rank high on market

attractiveness

Rank low in market risk

Possess a competitive advantage

Deciding How to Enter the Market

Five Modes of Entry into Foreign Markets

Indirect Exporting

Domestic-based export merchantsBuy the manufacturer’s products and then sell them abroad

Domestic-based export agentsIncluding trading companies, seek, and negotiate foreign purchase for a commission.

Two advantages:

Less investment & less risk

Direct Exporting Methods

• Domestic-based export departmentA purely service function may evolve into a self-contained export department operating as its own profit center.

• Overseas sales branch or subsidiaryThe sales branch handles sales and distribution and perhaps warehousing and promotion as well.

• Traveling export sales representativesHome-based sales representatives travel abroad to find business.

• Foreign-based distributors or agentsThese third parties can hold limited or exclusive rights to represent the company in that country.

Licensing

The licessor issues a license to a foreign company to use a manufacturing process, trademark, patent, trade secret, or other item of value for a fee or royalty

Joint Ventures

Foreign investors joined local invetors with share ownership and control

Direct Investment

The foreign company can buy part or full interest in a local company or build its own manufacturing or service facilities

Globally Standardized Marketing Pros & Cons

Advantages DisadvantagesEconomies of scale Differences in consumer needs,

wants, usage patternsLower marketing costs Differences in consumer response

to marketing mixPower and scope Differences in brand development

processBrand Consistency Differences in environmentLeverage ideas quickly and efficientlyUniformity of marketing practices

Cultural Dimensions

Individualism vs. collectivism High vs. low power distance Masculine vs. feminine Weak vs. strong uncertainty

avoidance

What Marketing Aspects Might Be Adapted for International

Marketing? Product features Labeling Colors Materials Sales promotion Advertising media

Brand name Packaging Advertising execution Prices Advertising themes

The Ten Commandments of Global Branding

Understand the global branding landscape

Avoid shortcuts in brand building Establish a marketing

infrastructure Embrace integrated marketing

communications Establish brand partnerships

The Ten Commandments of Global Branding (cont.)

Balance standardization and customization

Balance global and local control Establish operable guidelines Implement a global brand-equity

measurement system Leverage brand elements

Five International Product and

Communication Strategies

Levels of Product Adaptation

Production of regional product versions

Production of country versions Production of city versions Production of retailer versions

Price Choices

Set a uniform price everywhere Set a market-based price in each

country Set a cost-based price in each

country

What is a Gray Market?

A gray market consists of branded products diverted from normal or authorized distributions channels in the country of product origin or cross international borders; dealers in lower priced countries sell products in higher priced countries

Whole-Channel Concept for International Marketing Seller International headquarters Channels between nations Channels within nations Final buyers

Country of Origin Effects

Building Country Images Consumer Perception of Country

of Origin

The Marketing Organization

Export Departments

International Divisions

Global Organization

INDOMIE

1971Indofood established

as PT. Panganjaya Intikusuma

1972Indomie first appeared as the first instant noodles in

Indonesia

1990 Establish a joint venture

with Seven-Up Netherlands BV (51:49), an affiliate company of

PepsiCo Inc. to enter the snack food industry (the joint venture has been transferred to ICBP in

2010 as part of the restructuring of the

Group CBP)

1994Renamed become PT

Indofood Sukses Makmur Tbk

1995Acquired Bogasari

1997 Acquired 80% stake in

group companies engaged in plantations,

agribusiness and distribution.

2004Acquired 60% stake in the carton packaging

company.

2005Formed a joint venture

with Nestlé SA for marketing culinary

products.

2006 Acquired 55.0% stake in

shipping company, Pacsari Pte. Ltd.

("Pacsari").Acquired several

companies plantation in West Kalimantan.

HISTORY

1982Fried noodlea were first made, Fried noodles now sold in more than 50 countries worldwide.

2011Indofood produces about 11 billion packs of instant noodles for the domestic and export markets.

Indomie is ranked number 1 and 2 in Ramen Rater Top Ten Instant Noodles.Indonesian distinctive flavor can be so universally accepted.

ABOUT INDOMIE

INDOMIE PENETRATION IN NIGERIA

Target Market Selection

Nigeria is a country that has the highest score in the per capita income aspects, population, competition, and political risk compared to other countries in Africa that Indomie decided to make Nigeria as an export destination and joint ventures with companies Dufil.

NIGERIA

The official name of the country: the Federal Republic of Nigeria (Federal Republic of Nigeria), composed of 36 states and one Federal Capital Teritory (FCT)

Total area: 923 768 km2

Layout & Conditions Geo .:4˚ LS, LU and between 3˚ 14˚ - 15˚ BT.North: desertMiddle: grasslands with rocksSouth generally swamp

Border Country:U: Rep. Niger S: Gulf of Guinea / Atlantic OceanQ: Rep. Cameroon and Rep. Chad B: Rep. Benin

Climate: Tropical (rainy season and dry season)

Social and Cultural

Consists of 250 ethnic:North ethnic- Hausa / Fulani 29%- Kanuri 4%Ethnic the south / west- Yoruba 21%,ethnic east- Igbo 18%- Ijaw 10%- Ibibio 3.5%- Tiv 2.5%.

Education

Basic Education (Primary Education) 6 years.

Secondary Education (Junior Secondary School and Senior Secondary School), 6 years old.

Academy / Polytechnic and the University of 4 years.

Assisted by the World Bank, UNESCO, UNICEF, USAID / DFID, ADB, the Government of Japan and JICA.

Health

• Rank-2 of people living with HIV / AIDS worldwide, (± 2.6 million people)

• Outbreaks of disease Cholera, Meningitis, Yellow Fever, Malaria, diarrhea, typhoid and Avian Flu (H5N1)

Security

Low security level prone to conflict, especially the northern and eastern regions.

Economy

Analisis Nigeria Food Industry SWOTStrength

• With a rapidly increasing population, Nigeria has the dynamic potential consumers

• The increasing purchasing power of the middle class will increase the food industry

• Nigeria produces a number of local primary agricultural crops and the fourth largest in the world cocoa farmers.

Weakness

• Per capita food consumption is still very low.

• Regulation of Nigeria is very weak.• Low level of security.

Opportunities

Per capita food consumption is expected to grow very strongly over the coming years.

Investments into the food industry can strengthen internal trading system, in addition to the wider range of consumer goods can reap wider consumer.

The high level of consumer nigeria citizens who have high incomes.

Threat

Competition from regional countries with a better business environment, such as Ghana, Nigeria can look lost on foreign direct investment.

SWOT

Choosing The Mode of Entry

Market size and growth:2013 consumption of instant

noodles for 350K-400K tons / yr Indomie: 200K tons / yr market

share of 70%

Internal Resources, Assets, and Capabilities : 90% materials product take from Nigeria

EXPORTING

In 1988

JOINT VENTURE

Bisnis Unit of TolaramSector • Digital services• Distribution• Energy • FMCG• Infrastructure• Paper• Real estate• Textile

• Geography• Estonia• Ghana• Indonesia• Nigeria• Singapore

Dufil Prima Foods PLC (www.dufil.com)

o Is the result of cooperation entities Tolaram Group and the Salim Group, which exclusively manufactures and markets INDOMIE, under a PT Indofood.

o Indomie instant noodles become a market leader in West Africao There are 3 locations manufacture of Indomie in Kaduna, Ota and Port

Harcourto Also produce flour, seasoning, packaging and palm oil to meet the instant

noodle production kebuthano Dufil business venturing pasta and cooking oil with brand Power Pasta &

Power Oil

2012 The third plant with most advanced automatic machinesin Kaduna

1995 The first factory in Ota Ogun State

The first noodle factory Nigeria

and the largest in Africa

1988

2001 second plant Choba, Port

Harcourt, Rivers State

Currently controls + 70% market share

Growth per year 40%

2012 awarded'Most Trusted

Brand'in Nigeria