IB Business Management

4.7 International Marketing

Learning Outcomes• To understand the methods of entry into

international markets (A02)• To analyse and evaluate the opportunities and

threats posed by entry into international markets. (A03)

• To be able to discuss and evaluate the strategic and operational implications of international marketing (A03)

• To be able to discuss and evaluate the role of cultural differences in international marketing (A03)

• To be able to discuss and evaluate the implications of globalisation in international marketing (A03)

Central Question

Do you keep the 7P’s the same

when you enter a new

country/market?

International Marketing“the marketing of a firm’s products /

services in foreign countries”

Watch the Video on Oreos• What factors have contributed to a successful

international marketing approach for the brand Oreos?

LOOK AT THESE INTERNATIONAL BRANDS THAT ARE MARKETED

UNDER DIFFERENT BRAND NAMES INTERNATIONALLY

International Marketing• The marketing mix for

the product may have to be adapted

• This can be called ‘glocalisation’

Methods of Entering International Markets

Advantage DisadvantageOverseas buyer responsibility to sell and they know their market

Overseas buyer takes commission or a certain profit margin reduced profits

No need to setup business in the new market reduced cost and risk

Do not control marketing/distribution in the overseas market is it in line with your brand image,? Is there quality control?

1. Exporting – sell products directly to overseas buyer

Methods of Entering International Markets

Advantage DisadvantageWider distribution channel solves exporting problems (quotas, tariffs)

Are there the right resources in the country (Capital, Enterprise, Land, Labour) to make the product and maintain standards?

Overseas Government can offer incentives to the company to help set up because it improves their economy by adding jobs and up skilling. Incentives include tax breaks & grants

Are there cultural and ethical issues e.g. Do they need to adapt their motivational methods to suit the labour market. Is the company exploiting the country by using cheap labour and sending profits back to domestic nation?

2. Direct Investment – setting up a business presence in the overseas location

Methods of Entering International Markets

Advantage DisadvantageLow costs and reduced risks of international marketing as do not need to setup pyhsical stores

Do the products meet the safety and quality standards in the overseas nation. E.g. Garuda Air was banned from EU airspace due to safety concerns.

Can ‘tweak’ or adapt website to cater for different overseas market needs and cultures.

Damages can occur in distribution phase.Security concerns regarding online transactions.

Technology (drones/3D printing) changing the distribution landscape and potentially making it cheaper and more efficient.

Time taken for customer to receive end product

3. E-commerce – trading via the internet

Methods of Entering International Markets

Advantage DisadvantageCompanies retain their individual separate legal entities

Share the profits of the venture

Spread risks, shared expertise and resources minimise risks further

Time needed to identify the most appropriate businesses to combine with

If joining with a company in the overseas market – they will have knowledge of that market advise and recommend an appropriate entry strategy.

4. Joint Ventures – 2 or more companies invest in a shares business project. Resources are combined to form a separate business e.g. Sony Ericsson

Methods of Entering International Markets

Advantage DisadvantageAn alliance with a business in the overseas market can help gain access into that market.

Do both businesses share the same vision & mission

Risks reduced and Resources shared Is there a culture clash communication and organizational problems

6. Strategic Alliances – similar to joint ventures but no new company is formed. E.g. airlines often do this to have access to new regions/destinations

Methods of Entering International Markets

Advantage DisadvantageEstablished and recognised Brand and product selection

Start up costs can be high and franchisee pays % of sales every year to franchisor

Marketing completed by the Franchisor All procurement of resources has to be through the franchisor (often expensive)

Quick and easy to start trading Bound by the conditions of the franchise agreement

Negative publicity towards the brand in anyway could impact the franchisee

7. Franchising – A business allowing others to trade under its name in return for a fee and a royalty payment e.g. McDonalds

Methods of Entering International Markets

Advantage DisadvantageEntering new markets with minimal risk Will the Licensee maintain quality and

safety standards. If not Global brand image could be affected.

Licensee likely to have knowledge and experience of their market can adopt appropriate strategy for success given the cultural/societal differences

Fraudulent copies e.g. China

Licensing can apply to patents and trademarks and can receive through

Tend not to get % of sales (just fixed payment for the period of licensing agreement) so could be missing out on potential profits/revenue

8. Licensing – when another firm buys the right to produce the goods of the licensor e.g. Nike, Disney

Methods of Entering International Markets

Advantage DisadvantageMerging with a foreign company can help gauge access to overseas markets and lessen risk of failure

Share profits

Share losses Perhaps a Loss of old brand identity/loyalty

Combined capital and resources Clash of cultures inefficiency, poor communication and diseconomies of scale

Economies of scale due to increase in size

9. Mergers – When two businesses decide to integrate into a single organisation e.g. Daimler Chrysler

Methods of Entering International Markets

Advantage DisadvantageQuick way to enter a new overseas market Requires large capital investment

Economies of scale cost savings Possible diseconomies of scale if size not managed efficiently

Expands product portfolio and spreads risk Can give the firm that takes over a negative image due to reaction of pressure groups or stakeholders e.g. Kraft & Cadbury

10. Acquisitions or Takeovers – When one business buys out another by purchasing a majority stake in the target company

Opportunities for Entering new Markets

• Increased customer base• Economies of scale• Increased brand recognition• Spread risks• Extend Product Life Cycle• Gain more profit

Threats for Entering new Markets

• Legal issues e.g. ?• Political issues e.g. ?• Social & Demographic issues e.g. ?• Pressure groups – e.g. ?• Economic Issues – e.g. ?

Google Doc Time

TASK 10 minutes – Research real examples of companies entering overseas markets and identify any factors the company faced relevant to the above threats.

PEST FACTORS REGARDING INTERNATIONAL TRADE

Issues & Problems: Legal• Copyright & patent

protection differo Inventionso Ideas, logos, slogans,

etc.• Consumer protection

laws differo Advertising

Children Weapons Smoking &

Drinkingo Many countries pushing

for ban on junk food advertising

Issues & Problems: Political

• Trade barrierso Quotaso Tariffso Embargoeso Regulation, licenses,

visaso Subsidies

• Administrative barrierso Visas etc

Issues & Problems: Social & Demographics

• Different Culture • Multicultural nations• Differing consumer

tastes• Internet uptakes• Average age within

nation• Incomes vary within &

among countries• Pressure Groupso Language

Language barriers - examples 

•In Taiwan, the translation of the Pepsi slogan "Come alive with the Pepsi Generation" came out as "Pepsi will bring your ancestors back from the dead."

•Also in Chinese, the Kentucky Fried Chicken slogan "finger-lickin' good" came out as "eat your fingers off."

•When General Motors introduced the Chevy Nova in South America, it was apparently unaware that "no va" means "it won't go." After the company figured out why it wasn't selling any cars, it renamed the car in its Spanish markets to the Caribe.

•When Parker Pen marketed a ballpoint pen in Mexico, its ads were supposed to say "It won't leak in your pocket and embarrass you." However, the company mistakenly thought the spanish word "embarazar" meant embarrass. Instead the ads said that "It wont leak in your pocket and make you pregnant."

•In Italy, a campaign for Schweppes Tonic Water translated the name into Schweppes Toilet Water.

Issues & Problems: Economic

• Things to watch out for:o Transportation

costso Longer Supply

Chainso Communications

costso Interest rateso Exchange rate

fluctuations

International Marketing Mix

How would the marketing mix of the following products have to be adapted

for different markets

• Price• Product• Place• Promotion• Physical

Evidence• Processes• People• Packaging

How Can Cultural Differences influence

International MarketingGoogle Doc Time again ;)

Task – for a chosen company work in pairs to answer the above question. And add to the doc so we all have as a reference. Give relevant examples.

What are the Implications of Globalisation on

International MarketingGoogle Doc Time again ;)

Task – for a chosen company work in pairs to answer the above question. And add to the doc so we all have as a reference. Give relevant examples.

Is the Ansoff’s Matrix Relevant to International Marketing?

Market Penetration

Consolidation

Withdrawal

Do Nothing

Product Development

Market Development

Diversification

Existing

MARKETS

New

Increasing risk

Increasing risk

PRODUCTSExisting New

International Marketing – CUEGIS?

CONCEPT RELEVANCE TO INTERNATIONAL MARKETING THEORY

CHANGE

CULTURE

ETHICS

GLOBALISATION

INNOVATION

STRAETEGY