International Marketing for Mba

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Master of Business Administration

International Marketing
Paper 488914

Class Details

488914 International Marketing
CLASSES: LECTURER: Name Title Room: Phone: OFFICE HRS: Weekly 3-hour classes, 6 – 9pm

Mike Hoffmeister Prof Dr

Objectives
Prescriptor
• The nature and complexity of international marketing are examined. An appreciation of factors to be considered when developing international marketing strategies and plans; the making of management decisions is developed.

Paper aim
• To show the importance of international marketing for New Zealand business • To examine the factors to take into account when developing international marketing strategies and plans

Learning outcome
• Identify and evaluate marketing opportunities for local business in a global market. • Develop marketing strategies and plans for exporting to international markets

Organisation

Student learning time
• A minimum of 75 hours, comprising 18 hours of class contact, 3 hours of assessment and 54 hours of self-directed learning

Learning & Teaching Strategies
• Lectures, Group seminars, Class discussion, Readings, Case studies, …

Assessment
• Assignment • Weekly formative assessment involving questions and practice assignments to assist development of understanding of and ability to apply concepts

Weekly Programme (I)

Objective

Topics

Readings

WEEK 1: Introduction: Fundamentals of International Marketing
Importance of Export for NZ Discuss the challenges of global marketing Drivers towards globalisation Management orientation Text: Chapter 1-3 Fundamentals Case 1.1: Ikea´s Global Strategy

WEEK 2: Market Entry Options
Discuss impoact of entry barriers on the choice of an entry mode

Meaning of culture

Foreign Entry Research Export, Licensing, Joint Ventures, Foreign Direct Investment

Text: Chapter 4-6 Case 2.1: Daloon A/S

WEEK 3: Local Marketing
Segmentation Discuss how to create and implement local marketing activities Mature Markets New Growth Markets Emerging Markets Text: Chapter 7-10 Case 3.2: Levi Strauss Japan KK

Weekly Programme (II)

Objective

Topics

Readings

WEEK 4: Global Marketing (I) Brand and Product Strategies
Standardization Discuss the emergence of standardized global brand and product marketing strategies Brand Management Product Strategy Text: Chapter 11-12 Case: Disney in France; in Hill, International Business

Global Services WEEK 5: Global Marketing (II) Price, Distribution and Advertising Strategies Discuss selected standardized global marketing mix instruments Price Strategy Distribution Strategy Advertising Strategy Text: Chapter 13-15 Case 4.3: United Colors of Benetton

WEEK 6: Salesforce Management and Marketing Organisation
Discuss aspects of personal selling and marketing organisation · Managing a sales force · International Human Resources Management · Organizational Structure

Text: Chapter 16-17 Case: Sales Force in Automotive Retailing

Assignment for International Marketing

Please write a profile on one of the later mentioned companies with special regard to their international operations. Please consider the following:
• • • • What are the company´s mission statements and objectives? How has the company become international? Was it successful? What is their international brand and product strategy? What is the company´s philosophy concerning their employees and leadership style in general and specifically for their sales force?

Textbook

Paper based on

Global Marketing
Foreign Entry Local Marketing & Global Management Johny K. Johansson
Georgetown University, USA 3rd Edition, Boston et al, 2003

Master of Business Administration

International Marketing
Paper 488914

Part 1 Introduction

Weekly Programme

Objective

Topics

Readings

WEEK 1: Introduction: Fundamentals of International Marketing
Importance of Export for NZ Discuss the challenges of global marketing Drivers towards globalisation Management orientation WEEK 2: Market Entry Options WEEK 3: Local Marketing WEEK 4: Global Marketing (I) Brand and Product Strategies WEEK 5: Global Marketing (II) Price, Distribution and Advertising Strategies WEEK 6: Salesforce Management and Marketing Organisation Meaning of culture Text: Chapter 1-3 Fundamentals Case 1.1: Ikea´s Global Strategy

The future is not ahead of us. It has already happened. Unfortunately, it is unequally distributed among companies, industries, and nations.
(Philip Kotler 2003, Marketing Management)

What is Marketing?
Marketing
• … is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.
(Philip Kotler 2004, Principles of Marketing, p 5)

• … is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals.
(American Marketing Association)

Nike: Superb Marketing

Nike
• Company with a powerful brand and superb marketing skills
- It is not so much the shoe but where they take you: - Markts a way of life, a sports culture, a “Just Do It!” attitude - The culture and style is to be a rebel

• •

Gives customers more than just good athletic gear Customers do not wear Nikes, they experience them

Marketing Mix

A set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market. It consits everything the firm can do to influence the demand for its product.
(Philip Kotler 2004, Principles of Marketing, p 56)

Product
Variety; Quality Design; Features Brand name Packaging Services

Price

Target customers

List price Discounts Allowances Payment period Credit terms

Promotion
Advertising Personal selling Sales promotion Public relations

Place
Channels Coverage Assortments Locations Logistics

What is INTERNATIONAL Marketing?

International Marketing
• … is the process of planning and conducting transactions across national borders to create exchanges that satisfy the objectives of individuals and organisations.
(Czinkota/ Ronkainen 2004, International Marketing, p 4)

Why International Marketing
The Example of New Zealand

Export/ Import by Country in NZ

Merchandise Exports
• • • • • Total (07/2002-06/2003): $28,2 bill Australia 20% European Union 16% USA 15% Japan 12%

Merchandise Imports
• • • • • Total (07/2002-06/2003): $32,2 bill Australia 23% European Union 19% USA 13% Japan 12%
Source: NZ Trade Statistics, June 2003

Export/ Import by Product in NZ

Merchandise Exports
• • • • Total (07/2002-06/2003): $28,2 bill Diary products 20% Meat 15% Foresty 11%

Merchandise Imports
• • • • Total (07/2002-06/2003): $32,2 bill Motor vehicles 16% Mechanical machinery 13% Mineral fuels 10%

Source: NZ Trade Statistics, June 2003

Wine Industry in New Zealand
300 250 200 150
246,4 281,8 198,1

Wine Export in NZ$000

100 50
41,5 40,8 60,3 97,6 125,4

168,3 75,9

0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Source: NZ Trade Statistics, June 2003

Wool Exports in NZ
07/1997 – 06/1998

30 25

Wool Export in %

20 15 10 5 0
gi um di a tr al ia H K U K ly es at St d Ta an y Ja pa I ta In + G er m iw an n U ni te

B el

C hi

A us

na

Forestry Exports in NZ
04/2001 – 03/2002

1200

Forestry Export in NZ$000

1000 800 600 400 200 0
U SA es tr al ia na an es ia K or ea on g n Ja pa hi iw in K do n al a M pp ys i a

C

A us

Ta

ili

Drivers towards globalisation

Market Competition Technology Government

H on

Ph

In

g

Market Drivers

Common customer needs
• When customers in different countries have same/ simular needs in a product or service category
Nike, McDonalds

Global customers
• • Customers that need the same product or service in several countries Therefore, firms follow customers abroad
Hotel industry German Bosch follows Volkswagen

Global channels
• Existence of global distribution and logistic firms
Federal Express

Tranferable marketing
• Using the the same name packing, advertising, brand names and other marketing mix elements in various countries
Nike: Basket-ball star Michael Jordon

Competitive Drivers
Active
• • • • If competitors go to foreign markets Incentive for firms to follow Trying to match a competitor´s move Example
- Swedish Ericsson and Finnish Nokia both went into the USA market in the late 1990 - Toyota´s Lexus, Honda´s Acura and Nissan´s Infinity were introduced in the USA at the same time

Passive
• Presence of foreign competitors in a firm´s domestic market increases the need for the firm to venture abroad or to counterattack in foreign country • Example
- Benetton´s success in the USA has led The Gap and The Limited, two US competitors, to go abroad

Cost Drivers

Economies
• … of Scale
- Spreading activities across multiple product lines of businesses Unit cost

• … of Scope
- reduction by increased production

• Example
- Volkswagen: over 20 factories in foreign countries

Sourcing advantages
• Supply from a low-wage country
- global sourcing

Technology Drivers

Internet
• Global information and communication • Business transactions • E-commerce • On-line marketing • Examples
- Microsoft - Amazon - Ryan Air

Government Drivers

Favorable trade policies
• BMW goes to the US

Acceptance of foreign investments
• China

Compatible technical standards
• ISO 9000

Risks of international activities
Misunderstanding customers preferences and foreign business cultures Lack of international management know how Unstable governments Foreign exchange problems Foreign-government entry requirements and bureaucracy Tariffs and other trade barriers Corruption Technological pirating High cost of product and communication adaption Shifting borders
Kotler 2003: Marketing Management, p 385 and Kotler 1999, Marketing Management an Asian Perspective, p 410

Limits to global marketing

Limits
• • • • Negative industry drivers Lack of resources Localized mix requirements Antiglobalization trends

Leads to LOCALIZED Global Marketing

Localized Global Marketing
Definition
• Globalise …
- the product strategy by marketing the same
o product lines, o product designs and o brand names

every where but

• Localize …
- distribution and marketing communication

A firms global marketing strategy has to be flexibly implemented and take into account of the different degrees to which the activites need local adaptions and personnel New code word in marketing strategy

International management orientation

International management orientation

Need to classify international companies not only by quantitative figures but also by qualitative features (eg values, international orientation)
EPRG

• • • •

Ethnocentric Polycentric Regiocentric Geocentric

*Heenan/ Perlmutter 1979, S. 17ff

Management Orientation: EPRG-Model*

Ethnocentric orientation
• Home market attitude
- „This works at home; therefore, it must work in your country“ foreign

• Export company
- Each market is simular - Focus on home market - Sourcing, production and marketing from home market perspective - Management decisions done locally - Manager for oversears are sent from home markets

domestic

foreign

*Heenan/ Perlmutter 1979, S. 17ff; Kreutzer 1989, S. 12ff.; Hünerberg 1994, S. 114; Becker 1990, S. 270ff.

Management Orientation: EPRG-Model*

Polycentric orientation
• Host market orientation
- „We want to be a good local company“ foreign

• Multi-national company
- Each host market is different - Foreign market adaptions - Management decisions done in guest market - Akquisition of manager for guest market in that country

domestic

foreign

*Heenan/ Perlmutter 1979, S. 17ff; Kreutzer 1989, S. 12ff.; Hünerberg 1994, S. 114; Becker 1990, S. 270ff.

Management Orientation: EPRG-Model*

Geocentric orientation
• World orientation • Global company
- Worldwide complex company structure - International management - Standardised, global objectives and strategies - Recruitment of managers worldwide domestic foreign

foreign

*Heenan/ Perlmutter 1979, S. 17ff; Kreutzer 1989, S. 12ff.; Hünerberg 1994, S. 114; Becker 1990, S. 270ff.

Management Orientation: EPRG-Model*

Regiocentric orientation
• Based on polycentric orientation
- Considers increasing regionalisation of economies ie Europe - Base: not countries but country groups - Each country group is different while each country within a group is simular f f domestic f f f f f f

*Heenan/ Perlmutter 1979, S. 17ff; Kreutzer 1989, S. 12ff.; Hünerberg 1994, S. 114; Becker 1990, S. 270ff.

Country Specific Advantages (CSAs)

Factors that determine competitive advantages of a country
• Factor Conditions
- The nation’s position in factors of production, such as skilled labor or infrastructure, necessary to compete in a given industry

• Demand Conditions
- The nature of the home demand for the industry’s product or service

• Related and Supporting Industries
- The presence or absence in the nation of supplier industries and related industries that are internationally competitive

• Firm Strategy, Structure, and Rivalry
- The conditions in the nation governing how companies are created, organized, and managed, and the nature of domestic rivalry

Firm-Specific Advantages (FSAs)
Firm-specific advantages
• • • • Patent Trademark brand name Control of raw materials required for the manufacturing of the product

Knowledge-Based FSAs
• Knowledge is recognized as one of the key resources of the firm • Resource-Based Strategy
- Defines the firm not in terms of the products or services it markets, or in terms of the needs it seeks to satisfy, but in terms of what it is capable of

• Marketing FSAs
- It is important to recognize that the source of a firm-specific advantage can depend on specific market know-how

Culture
Defined as
• the underlying value framework that guides an individual’s behavior

Reflected in an individual’s perceptions
• of observed events, in personal interactions, and in the selection of appropriate responses in social situations

Manifests itself
• in learned behavior as individuals grow up and gradually come to understand what their culture demands of them

The modern conception of culture
• • focuses directly on observable behavior; consequently, culture creates a repertoire of behavioral skills

Cultures Across Countries

High Context Cultures
• The meaning of individual behavior and speech changes • Nonverbal messages • When words are spoken: “reading between the lines” • Found in most of the European countries, some of Latin American countries, and in Japan and many of the newly industrializing Asian countries

Low Context Cultures
• Intentions are expressed verbally • A person’s meaning should be explicit: not taken for granted • Propositions have to be justified and opinions defended openly • Found in the USA, Russia, Australia and New Zealand

Five different “Silent Languages”
Space
• Relates to matters such as the distance between two people conversing

Material Possessions
• Usually describes a person’s station in life

Friendship Patterns
• Reflective of a person’s cultural upbringing

Agreements Across Cultures
• Interpreted differently across cultures

Time
• Studies have documented the cultural problems with time perceptions

Geert Hofstede Cultural Dimensions

Source: www.itim.org/geert-hofstede

Hofstede’s Cultural Dimensions
Individualism versus Collectivism
• In a collective society the identity and worth of the individual is rooted in the social system

High versus Low Power Distance
• High power distance societies tend to be less egalitarian

Masculine versus Feminine
• Captures the degree to which culture is dominated by assertive males

Uncertainty Avoidance
• Rates nations based on the level

Confucianist Dynamics
• Distinguishes the long-term orientation of Asian people; from the more short-term outlook of Western people

Hofestede´s Classification of Triad Countries
Japan Individualism Power Distance Masculinity Risk Tolerance Context
Low

Anglo-Saxon
(Canada, US, UK)

W. Europe
Northern

W. Europe
Continent

High

High

High

High

Low

Low

High

High

High

Low

High

Low

High

High

Low

High

Low

High

Low

Four stages of business negotiation

Japanese Nontask Sounding
Considerable time and expense devoted to such efforts it the practice Most important step; high first offers with long explanations and indepth clarifications Persuasion is accomplished primarily behind the scenes. Vertical status relations dictate bargaining outcomes Concessions are made only towards the end of negotiations; holistic approach to decision making. Progress is difficult to measure for Americans

Americans
Relatively shorter periods are typical

Task-Related Exchange of Information

Information is given briefly and directly. “Fair” fist offers are more typical Most important step; minds are changed at the negotiation table and aggressive persuasive tactics are used Concessions and commitments are made throughout; a sequential approach to decision making

Persuasion

Concessions and Agreements

Case 1.1 IKEA

DISCUSSION QUESTIONS
1. What are IKEA's firm-specific advantages? Country-specific advantages? 2. What are the cultural factors which make expansion abroad in retailing difficult? What has made it possible in IKEA's case? 3. Describe how IKEA'S expansion has reenergized mature markets around the world and changed the competitive situation. 4. What could be the cultural reasons for IKEA's problems with store managers and employees in North America? 5. How does the TV advertising campaign initiated by IKEA overcome the entry barrier of high advertising expenditures?

Weekly Programme

Objective

Topics

Readings

WEEK 1: Introduction: Fundamentals of International Marketing

WEEK 2: Market Entry Options
Discuss impoact of entry barriers on the choice of an entry mode Foreign Entry Research Export, Licensing, Joint Ventures, Foreign Direct Investment Text: Chapter 4-6 Case 2.1: Daloon A/S Case 2.3: Illycaffee Company

WEEK 3: Local Marketing WEEK 4: Global Marketing (I) Brand and Product Strategies WEEK 5: Global Marketing (II) Price, Distribution and Advertising Strategies WEEK 6: Salesforce Management and Marketing Organisation

Master of Business Administration

International Marketing
Paper 488914

Part 2 Market Entry Options

Lecturer Profile
Prof Dr Mike Hoffmeister

Academic
Since August 2003
• Professor for International Business at the University of Applied Sciences Braunschweig/ Wolfenbuettel, Campus Wolfsburg, Germany

Business
1992 – 2003 Volkswagen AG
• • • • • Head of Sales People Development and Training for the Volkswagen Brand in Germany Area Sales Manager for the Arabian Gulf States Marketing Consultant for Brand Management and Dealer Network Strategy Trainee at dealership in the USA Member of the Automotive Committee for Sales People Development of the Automotive Industry in Germany

Since 2000 MBA Lecturing Experience
• KIMS Kassel International Management School, Germany (Sales Management)

PhD at University of Kassel, Germany
• subject: Multi-Franchising in Car Retailing • •

1983 – 1986
2.5 year apprenticeship at Volksbank Wolfsburg Soldier in German Army

1986 – 1992 Business Studies
• • Studied Marketing and Distribution at the University of Muenster, Germany Internships at Banks and Advertising agencies in New York, San Francisco, Hong Kong and South Africa

Contact
• • • Tel +49-5361-831533, 831501 Mail: [email protected] Robert-Koch-Platz 10-14, 38440 Wolfsburg, Germany

Wolfsburg

Hamburg

Wolfsburg Amsterdam

Berlin

Frankfurt

Prague

Munic

Wolfsburg

German Unification

Weekly Programme

Objective

Topics

Readings

WEEK 1: Introduction: Fundamentals of International Marketing

WEEK 2: Market Entry Options
Discuss impact of entry barriers on the choice of an entry mode WEEK 3: Local Marketing WEEK 4: Global Marketing (I) Brand and Product Strategies WEEK 5: Global Marketing (II) Price, Distribution and Advertising Strategies WEEK 6: Salesforce Management and Marketing Organisation Foreign Entry Research Export, Licensing, Joint Ventures, Foreign Direct Investment Text: Chapter 4-6 Case 2.1: Daloon A/S Case 2.3: Illycaffee Co

Research topics

Entering new markets abroad requires information about
• Political environment • Physical environment • Sociocultural environment • Economic environment • Regulatory environment

Political risk factors
Level 1: General Instability
• Revolution, external aggression

Level 2: Expropriation
• Nationalisation, contract revocation

Level 3: Operations
• Import restrictions, local content rules, taxes, export requirements

Level 4: Finance
• Repatriation restrictions, exchange rates

Unclear legal systems

Lack of transparency; unclear legal systems

Russia Indonesia

Kenyo Thailand

Japan UK USA Singapore 0 20 40 60 80 100

Contracts in China

Germany
• • • • • Official check of credibility Written Contract End of negotiation process Defines mutual rights and commitments Written = commitments

China
• No tradition for written contracts; courts have no power; judges are not independent and have to execute orders Rely on personal references Shows mutual interest / relationship Start of co-operation Defines mutual purpose No lasting regulation for future A good and trustful co-operation implies that under new circumstances the contract can be newly negotiated and adopted

• • • • • •

Personal relationships are more important than written contracts ie Hongkong: in 1996, 1/3 of all sub-contracts of companies are based on verbal commitments

selected
Source: Economist, March 3, 2001, p. 100

Brasil

Top 3

China

Piracy/ Counterfeiting in China

Personal-care product companies such as Henkel and Procter and Gamble estimate that about 25% of the goods bearing their names in China are fake Pfizer started selling Viagra in China in July 2000
• By end of the year, 3 local producers introduced a cheaper version of the pill • Within the next 90 days another 30 companies followed

Source: Kotler, Marketing Management: An Asian Perspective

McDonald´s in China

First McDonald´s restaurant opened in Beijing downtown in 1992; 20 year lease contract Became then the largest McDonald´s in the world within two years In 1994 the Beijing city government abruptly informed McDonald´s that the location would be needed for commercial complex and that McDonald´s had to move McDonald´s took the Beijing City Government to court but lost

Source: Kotler, Marketing Management: An Asian Perspective

Gillette Razor Blade in China

The Huaxing Razor Blade Factory was producing Gillette lookalike razor blades and sold them in the same packaging Chinese authorities fined that company US$ 3,500 and told management to stop Five months later, the company still produced those razor blades Chinese authorities fined that company again (US$ 3,300) Huaxing Razor Blade Factory argued it did not want to throw away already produced material

Source: Kotler, Marketing Management: An Asian Perspective

Coca Cola in India

1977 the Indian government decreed that the secret formula for the cola and 60% of the equity of its Indian subsidiary must be transferred to local nationals
• Reasons: Indian government wanted to control manufacturing and to stop the outflow of foreign exchange

Coca-Cola deceided to withdraw from India rather than jeopardize their firm-specific advantages, giving the secret formula to domestic imitators 1990’s: Liberalisation in India
• Less-restrictive investment conditions

Coca-Cola returned to India in 1993

Israel boycott list
www.inminds.co.uk/boycott-faq.html

Israel boycott list
www.inminds.co.uk/boycott-faq.html

Israel boycott list
www.inminds.co.uk/boycott-faq.html
Quoted/Source www.inminds.co.uk/boycott-faq.html
• “McDonalds is a "major corporate partner" of the Jewish United Fund. In its own words, the Jewish United Fund "works to maintain American military, economic and diplomatic support for Israel; monitors and, when necessary, responds to media coverage of Israel." Also, McDonalds chairman and CEO Jack M. Greenberg is a honorary director of the American-Israel Chamber of Commerce and Industry”. “McDonalds has 80 resturants in israel, providing employment to 3000 israelis.” “McDonalds has just announced it is closing down its operation in the middle east due to loss of revenue as a direct result of the boycott (Oct 2002), and is replacing Greenberg as its chairman and CEO (Dec 2002). Since the launch of the boycott campaign, two of Jordan's six McDonald's franchises have closed due to lack of business. In Egypt, McDonald's decided to change its brand name to Manfoods this past March, in an attempt to dodge the boycott. It had no effect and Egyptian police forces were ordered to guard the entrances to McDonald's restaurants, after stone throwing incidents took place. A total of 175 restaurants will be closed at a loss of $350 million.”

• •

Product reliability in the USA
The McDonald's Hot Coffee Case
A woman spilled hot coffee on herself while driving. She had purchased the coffee at the drive-through window of a McDonald's Restaurant. She sued McDonald's for compensation for her injuries (about $11,000) and was awarded nearly $3 million in compensatory and punitive damages by a New Mexico jury.
• Stella Liebeck, 79, purchased the coffee and while driving her car, placed the coffee cup between her legs and tried to remove the lid. The cup spilled and coffee ran into her lap. Wearing a sweatsuit and sitting in a bucket seat, she received second- and third-degree burns across her buttocks, thighs, and labia. After the spill, Liebeck spent seven days in the hospital and three weeks recuperating at home with her daughter in attendance. This was followed by skin grafts. During this period, she lost 20 pounds—to 83 pounds—almost 20% of her body weight. Liebeck wrote to McDonald’s and asked them to turn down the coffee temperature, which was set at 170 degrees. She also asked for her out-of-pocket medical expenses of about $2,000 plus the lost wages of her daughter. McDonald’s offered $800. She sued, asking for no less than $100,000 in compensatory damages, including pain and suffering, and triple punitive damages. Just before trial, she offered to settle for $300,000, but McDonald’s rejected the offer.





Impact of Media in the USA
Audi and the 60 Minutes Show

When 60 Minutes did the "expose" on Audi 5000 sedan's "sudden acceleration" problems that supposedly caused accidents. This caused sales of Audi to slip until they redesigned the model and called it a different name.

Foreign market entry barriers

Barriers
• Primarly, to protect domestic business agianst foreign competitors inefficiency creates higher prices for consumers Gatekeepers hold the key to the market and have a chance to profit from a monopolistic position

Tariff barriers
• • • • • • Customs Tax Quotas for imports Slow customs procedures Special product tests for imports Bureaucratic inertia in processing import licenses

Cost
• •

Nontariff barriers

Impact of Barriers

By lobbying home or host governments When the imported product has a certain level of “local content” or when imports involve production for reexport Establishing manufacturing in a member country in the regional group; the firm can then export to the market country in the region at lower tariff rates from the transplant operation inside the region Government Regulations: company may need a native partner who can carry out negotiations with government authorities and local regulators difficulty to get members of the distribution channels to carry the firm’s product

Foreign Entry Research

Globalisation
• research firms expand abroad and beome multi-national as well • Such as
- AC Nielsen in the USA - Taylor Nelson Sofres in the UK - GfK in Germany

• The internet aggregators: cheaper, better, faster
- Profound.com - AllNetResearch.com

AC Nielsen in the USA

ACNielsen is the world's leading marketing information company. 21,000 employees worldwide Offering services in more than 100 countries ACNielsen provides market research, information, analysis and insights to the consumer products and service industries.

Macrosegmentation
Grouping countries on the basis of common characteristics deemd to be important for marketing purposes Examples
• Trade blocs
- EU, NAFTA, ASEAN, …

• Geographical regions
- Southeast Asia, Oceania, Middle East, Western Europe, …

• Customer behavior
- Lifestyle segmentation

Lifestyle Segmentation of the EU Consumer

A study covering France, Germany, Italy and the UK identified eight groups:
• Upper conservative Traditional mainstream Traditional working class Modern mainstream Trendsetter Avantgarde Socially concerned Underprivileged

Another broader-based European study produced sixteen socalled Euro-styles:
• Citizens Moralists Ultra-conservatives Underprivileged Intellectuels Pioneers Puritans Tolerants Suburbanites Yuppies Prudents Dandies Rockers Romantics Prudents Vigilantes

The RISC Organization in Geneva offers a continuous measurement of trends. Their research has produced six Eurotypes:
• Traditionalists Homebodies Pleasurists Strivers Trendsetters Rationalists www.languages.dk/marketing/lifestyle_segmentation_of_europe.htm

Foreign Market Entry Modes

Exporting

Licensing

Strategic Alliance

Foreign Direct Investment

Amount of commitment, risk, control and profit potential

Foreign Market Entry Modes Exporting
Exporting
Licensing Strategic Alliance Foreign Direct Investment

Indirect Exporting
• Export management companies work with independent agents which operate for the firm in overseas markets, going to fairs, and contacting distributors Pro
firm avoids the overhead costs and administrative burden involved in managing their own export affairs Less risk Economies of scale effects (location economies) at home/ learning curve High transport cost skills and know-how developed through experiences abroad are accumulated outside the firm, not in it

indirect

direct



Export market

Agent



Con
-

Agent

Home market

Direct Exporting
• Pro
The firm is able to more directly influence the marketing effort in the foreign market

Export Company

Foreign Market Entry Modes
Licensing
Exporting

Licensing

Strategic Alliance

Foreign Direct Investment

The licensor licenses a foreign company to use a
• • • • manufacturing process Trademark Patent trade secret or other item of value for a fee

pro
• • The need for market research is reduced The licensee may support the product strongly in the new market Lack of tight control over manufacturing and marketing Less economies of scale/ learning curve effects in home country Less profit (taken by licensee) Limits the ability to move budgets/profits across countries in order to support competitive attacs on others Loss of technology know how

Con
• •

Variations
• • • Manufacturing contract Management contract Franchising

• •



Foreign Market Entry Modes
Licensing: Franchising
Exporting

Licensing

Strategic Alliance

Foreign Direct Investment

pro

Franchising

• •

Franchising
• • More complete form of licensing Franchiser offers a franchisee a complete brand concept and operating system Longer-term commitment Franchiser often assists the franchisee to run the business



Marketing concept is defined in detail Quicker international expansion possible The local franchisee raises the necessary capital and manages the franchise

• •

con
• Careful and continuous quality control is necessary

Foreign Market Entry Modes
Strategic Alliance
Exporting Licensing

Strategic Alliance

Foreign Direct Investment

Strategic Alliances
• • Partnership Formal or informal arrangement between two or more companies; sometimes competitors, across borders Exchange or share value activities
R&D Manufacturing Marketing Distribution

Advantages
• • • • • • Improved capacity load Wider product line Inexpensive access to a market Quick access to a market Assets are complimentary Each partner can concentrate on what they do best



Distribution Alliances
• • Also called “piggybacking”, “consortium marketing” STAR Alliance
United Airlines, Lufthansa, Air Canada, SAS, Thai Airways, China Air, and Varig Brazilian Airlines

Disadvantages
• • Time arrangement can limit growth for the partners Can hinder learning more about the market, creating obstacles to further inroads

Foreign Market Entry Modes
Strategic Alliance: Joint Venture
Exporting Licensing

Strategic Alliance

Foreign Direct Investment

Pro

Joint Venture
Joint Venture
• • • • • • Foreign investors join with local investors to create a joint venture Common business objectives Share ownership and control Involve capital investments Creation of new corporate unit Partners
High net-worth families Relatively small companies in the same business Large companies Government or government-linked companies

• •

Benefits from local partners knowledge of host countries Sharing development costs and risk

Con
• • • • Knowhow transfer to partner Difficult to manage (common goals, visions) especially when various cultures are involved Limited economies of scale Limited ability to coordinate international strategy against competitors

Foreign Market Entry Modes
Foreign Direct Investment
Exporting Licensing Strategic Alliance

Foreign Direct Investment

Direct ownership of foreign-based assembly or manufacturing facilities

Pro
• • • • • • Cost economies in form of cheaper labor or raw materials Foreign government incentives Better image in host market because it creates jobs Deeper relationship with government, customers, local suppliers and distributors Full control over the investment (manufacturing and marketing) Reduces risk of know how transfer to competitors (ie Joint Venture)

Cons
• • • Large investment Blocked or devalued currencies Expensive to exit (reduce or close operations

Internationalisation stages

Stage 1: Indirect exporting, licensing Stage 2: direct export, via independent distributor Stage 3: establishing foreign sales subsidiary Stage 4: local assembly Stage 5: foreign production

Export Expansion Strategy
Waterfall Strategy
• The firm gradually moves into overseas markets
- Advantages of this strategy are that expansion can take place in an orderly manner and it is relatively less demanding in terms of resource requirements - Disadvantage of this strategy it may be too slow in fast-moving market
Waterfall Strategy
home host host host

Sprinkler Strategy
• The firm tries to enter several country markets simultaneously or within a limited period of time
- Advantages of this strategy are that it is a much quicker way to market penetration across the globe and it generates first-mover advantages - Disadvantage of this strategy is the amount of managerial, financial, and other resources required
Sprinkler Strategy
home host host host

Case 2.1 Daloon A/S

DISCUSSION QUESTIONS:
• What are the firm-specific advantages of Daloon over its competitors? The country-specific advantages? Any disadvantages? Why was the German market so difficult for Daloon to enter? What was required to make entry successful? How well did Daloon adapt its marketing organization to the requirements in the German market? How did Daloon try to create a strong relationship with and loyalty among its customers? How did Daloon gain McDonald's Germany as a customer? How is Daloon leveraging this foothold into becoming a supplier for McDonald's in other European countries?







Case 2.3 Illycaffee Company

DISCUSSION QUESTIONS:
1. What created the problems with the existing distribution strategy in the German market? Was the distribution alliance with Hag ill-advised? 2. To what extent do you think the pan-European strategy shift well-founded? For example, one question is whether the espresso market is global or multi-domestic. 3. What would be your recommendation to Mr. Illy?

Weekly Programme

Objective

Topics

Readings

WEEK 1: Introduction: Fundamentals of International Marketing WEEK 2: Market Entry Options

WEEK 3: Local Marketing
Segmentation Discuss how to create and implement local marketing activities Mature Markets New Growth Markets Text: Chapter 7-10 Case 3.2: Levi Strauss Japan KK

Emerging Markets WEEK 4: Global Marketing (I) Brand and Product Strategies WEEK 5: Global Marketing (II) Price, Distribution and Advertising Strategies WEEK 6: Salesforce Management and Marketing Organisation

Assignment for International Marketing

Please write a profile on one of the mentioned companies with special regard to their international operations. Please consider the following:
• • • • What are the company´s mission statements and objectives? How has the company become international? Was it successful? What is their international brand and product strategy? What is the company´s philosophy concerning their employees and leadership style in general and specifically for their sales force?
BASF, Aldi, Carrefours, Walmart, K-Mart, Ikea, GAP, Toys R Us, McDonalds, Starbuck´s Coffee Shop, 7-Eleven, Subway, Walt Disney World, Ritz Carlton Hotel, Emirate Airlines, Lufthansa, Marriott, UPS, Siemens, Caterpillar, Xerox, BASF, Coca Cola, Unilever, Universial Studios, Harley Davidson, Dell Computers, McKinsey, Boston Consulting, Becks Bier, Fosters Beer



Master of Business Administration

International Marketing
Paper 488914

Part 3 Local Marketing

Weekly Programme

Objective

Topics

Readings

WEEK 1: Introduction: Fundamentals of International Marketing WEEK 2: Market Entry Options

WEEK 3: Local Marketing
Segmentation Discuss how to create and implement local marketing activities Mature Markets New Growth Markets Text: Chapter 7-10 Case 3.2: Levi Strauss Japan KK

Emerging Markets WEEK 4: Global Marketing (I) Brand and Product Strategies WEEK 5: Global Marketing (II) Price, Distribution and Advertising Strategies WEEK 6: Salesforce Management and Marketing Organisation

The beer market

Can Beer be an international, global product?

Johanson, Page 225

The beer market
Corona
• Became most popular imported beer in the US in 1999 • Mexicans regard Corona as a relatively low-class beer • Targets two niche markets
- Mexicans living in the US - Young American beer drinkers, many of whom vacationed on Mexican beaches

• Export all over the world

Heineken
• Available in 170 countries • Most international beer in the world

Germany
• Over 3.500 beer brands
Johanson, Page 225

Local Microsegmentation
Segmentation Criteria
• Economic
- the most basic local segmentation criterion is still economic development



Demographic
- the age and family structure in different countries play an important role in determining global segments



Culture
- people care about their identify even though a lot has been said in the media about the emergence of global segments of people



Benefits
- the most clearcut segmentation criteria are those which focus on the benefits sought



Lifestyle
- consumers start developing their own lifestyle with buying behavior involving more than simple necessities

Segmentation and Positioning

Uniform
The same accross countries

Nike
Young boys and aspiring athletics

Ikea Mobile phones

Positioning
Adapted
Differs from country to country

Volvo Pampers

Levi´s Honda

Universal
the same across countries

Unique
Differs from country to country

Local market segment

Local Marketing in Mature Markets

Local marketing in
• mature markets • new growth markets • emerging markets

Three Local Marketing Environments
Mature markets
• Show slow growth apart from some high-technology markets. The customers in these mature markets are pampered by strong domestic and global companies who compete intensely for customer satisfaction

New growth markets
• Show greater purchasing power and more demanding consumers than emerging markets. Possess a rapidly developing marketing infrastructure

Emerging markets
• Characterized by low levels of product penetration, weakly established marketing infrastructure, relatively unsophisticated consumers with weak purchasing power, and weak domestic competitors

Three Local Marketing Environments
Emerging Barriers High New growth Medium
Getting stronger

Mature Low Strong Strong Saturated Low
In store promotion

Domestic competition Weak Foreign competition Consumer markets Political risk Distribution Strategic focus Product range Product design Pricing Weak Embryonic High Weak
Market development

Strong Strong Medium Strong
Participation in growth

Compete for share

Low Basic Affordable

Limited Advanced Status

wide adapted Value

Local Marketing in Mature Markets

Local marketing in

• •

Mature markets
• Show slow growth apart from some high-technology markets. The customers in these mature markets are pampered by strong domestic and global companies who compete intensely for customer satisfaction

mature markets
new growth markets emerging markets

Ultra-Heat-Treated Milk

Ultra-Heat-Treated Milk requires no refrigeration US
• • • • Large refrigerators, therefore buy milk by gallon or half-gallon Prefere cold and fresh milk (= healthy) Assume technologically sophisticated food must be artificial Not well accepted

EU
• Little room in their refrigerators and pantries prefere small cartons • More accepted

Mature Markets
Competition
• In many mature markets intense competition has produced a management focus on customer satisfaction • There exists a need to make sure that existing customers will stay loyal Two factors make customers satisfied in mature markets
- Product quality including functional performance factors

• Emotional factors or a matter of pleasing the customer

Segmentation
• customers are increasingly particular with well-developed preferences • The fragmentation of mature markets presents an opportunity that there will often be a part of the market that has yet to find the kind of product desired

Marketing Mix in Mature Markets
Product Policies
• • Many Third World countries tend toward selling a low-cost “me-too” product in a mature market
A “me-too” product is basically a copy of another product, often with simpler features and at a lower price

The global marketer introducing a new kind of product to a local market has the advantage of little or no competition

Pricing
• In mature markets it is common to think of pricing in terms of selecting a target position and then using temporary deals and offers to attract customers in the short term

Distribution
• • In mature markets, the distribution system is usually well developed One distribution strategy is “piggybacking”
An existing network controlled by another company, often a potential competitor, in which the product is distributed through contracting with the competitor to move products on a fee or commission basis

Promotion
• In many mature markets where market share is the criterion of success s
Sales promotions are used to break the habitual choice of the loyal customer

Pan-European Marketing
Europe becoming a very large single market Approaching 400 million consumers Single currency (EURO €) 15 members
• Belgium, Germany, France, Italy, Luxembourg, Netherlands. Denmark, Ireland, United Kingdom, Greece, Spain, Portugal, Austria, Finland, Sweden Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, the Slovak Republic, and Slovenia Negotiation process
Bulgaria, Romania , Turkey.

New members in May 2004




Pan-European Marketing
Competition
• The integration forced large European corporations to start coordinating previously independent national operations • For smaller European companies and even the many large firms, the threat from these foreign entrants has been met by the creations of larger and stronger companies • At the corporate level, there seems to be only one strategic response possible for European firms: Get bigger and go panEuropean

Product Positioning
• There are very few products today that can maintain different images in different countries of Europe • In pan-European marketing, product positioning is the same across countries

Pan-European Marketing-Mix
Product Policies
• • The marketing mixes of the European marketers have moved toward uniformity as the pan-European strategies are implemented Most packaged goods in Europe feature packaging in at least four languages: English, French, German, and Spanish

Pricing
• • • Pan-European pricing is a particularly complicated issue As the single euro currency is introduced and companies have to set a common euro price throughout the region Price differentials on the same product and brand in different countries are being minimized to avoid inducing customers to buy in a neighboring country

Distribution
• Retail and wholesale distribution is gradually being transformed from locally based smaller units to large integrated organizations resembling those common in North America

Promotion
• There is increasing use of pan-European TV advertising, taking advantage of the satellites beamed across previously closed borders

Marketing in North America
Regional Trade Agreements
• The 1994 NAFTA agreement has created increased exchange between
- Canada - the U.S. - Mexico

Background
• Ethnic Diversity
- A fundamental cultural factor is the region’s ethnic diversity

• Religion
- In North America, church and state are separated by law

• Decentralization
- In North American, firms are spread all over the world and even into small towns

Marketing in North America
Competition
• The U.S. is one of the most competitive markets in the world

Market Segmentation
• For segmentation purposes cultural identity can serve as a useful criterion

Product Positioning
• When positioning in the U.S., premium is placed on direct and straightforward explanations • The Canadian approach treats differences in cultural norms with more sensitivity and more soft sell

Marketing-Mix in North America
Product Policies
• Market size, affluence, and diversity have meant that the North American market offers a dizzying array of choices of product and services The attractiveness of the North American market has made it a very competitive arena for many domestic and foreign producers The great size of the North American continent and the wide spread of its people seems to be the main cause for a very efficient distribution system in the U.S. North American communications media are similar to media elsewhere, but the use of advertising and commercials is greater in North America

Pricing


Distribution


Promotion


Increased Credit Use in the USA
• More and more consumers are fueling their affluent lifestyles with credit that is easily available, and accepted, as a normal way of life in the United States.

Source: www. Economy.com

Local Marketing in Growth Markets

Local marketing in
• mature markets

New growth markets
• Show greater purchasing power and more demanding consumers than emerging markets. Possess a rapidly developing marketing infrastructure




new growth markets
emerging markets

Growth Markets
Two Kinds of Markets
• • Markets that are relatively rich in natural raw materials Markets that have turned toward Western-style capitalism more recently, with the help of foreign direct investment

The Role of Trade Blocs
• Membership in trade blocs plays a very important role for two reasons
- It makes the country more attractive to foreign investors - It creates an trading region with an enlarged market potential

Market Segmentation
• • New growth markets are in the growth phase of the PLC Market segmentation in these countries differs from that in the developing countries primarily in the degree to which a core middle class is developed

Product Positioning
• In new growth markets it is easy to observe the attention given to well-known brand names

Marketing-Mix in Growth Markets
Marketing Tactics
• Product
- Basic localization to make sure the product functions well is necessary in these markets, and customers can be as demanding as elsewhere

• Pricing
- Pricing is important but can largely reflect the same considerations as in the advanced markets—demand, costs, competitive conditions

• Distribution
- Distribution is very important and warrants larger margins and more support services than elsewhere

• Promotion
- Promotional support, tie-ins with local representatives, and an open mind in regard to trusting locals will be more justified in the future

Megatrends in Asia

From Government driven to market-driven economies From villages to supercities From agricultural society to information age From labor-intensive to high-technology instustries From west to east, as Asia becomes the center of the world

Source: John Naisbitt, Megatrends Asia, 1995)

Population in New Asian Growth Markets
(year 2000, in millions)

1400 1200 1000 800 600 400 200 0

1260 1003

211

282 127 47 22 82

or ea

an

SA

hi na

Ta iw an

es ia

ia

In d

GDP in New Asian Growth Markets
(year 2000, US$bill)
9870

10000 8000 6000
4800

4000 2000 0
hi na ia In d on C
1900 1100 474 153 457 310

So u

or ea

an

SA

Ta iw an

es ia

In d

So u

G er m an

Ja p

th

K

U

y

G er m an

In d

Ja p

on

C

th

K

U

y

Marketing in the New Asian Growth Markets
Market Environment
• Several of these countries are ethnically homogeneous while others are populated by several racial groups

Regional Trade Agreements
• • • The Association of South East Asian Nations (ASEAN) was created in 1967 APEC (Asia-Pacific Economic Cooperation) is a large association that spans both sides of the Pacific In 1992, ASEAN countries met to formalize a far-reaching trade agreement forming the ASEAN Free Trade Area (AFTA)

Market Segmentation
• • The economic upswing in the Asian high-growth markets has led to the emergence of a significant middle class in Thailand known as the “have somes” However justified from an economic perspective, avoiding the rural areas where people tend to be less well off can create some political problems

Product Positioning
• The Asian markets’ desire for global identification has made many multinationals with more mundane products use global standardization in their positioning strategies

Marketing-Mix in the New Asian Growth Markets
Product
• • • Policies: The emphasis on these markets as followers of global mature markets makes standardized product policies natural Design: The Asian consumer is generally more eager to achieve “a harmonious whole” than Western individuals New Products: The buyers in Asian markets are basically eager to get access to the products they see available in mature foreign markets

Pricing
• In Asia as elsewhere, the global marketer faces a choice between a high skimming price strategy and a lower penetration price strategy

Distribution
• Many observers agree that the most visible sign of economic growth in the Asian markets is the dynamism of the urban retail sector

Promotion
• By and large the promotional strategies employed by multinationals in Asian markets have been only minimally adapted from elsewhere

Local Marketing in Emerging Markets

Local marketing in
• • mature market new growth markets

Emerging markets
• Characterized by low levels of product penetration, weakly established marketing infrastructure, relatively unsophisticated consumers with weak purchasing power, and weak domestic competitors



emerging markets

Local Marketing in Emerging Markets

The macroenvironment in the typical developing market is characterized by uncertainty Consumer needs tend to be basic and easy to identify Market Segmentation
• In these markets, income level represents the basic segmentation criterion
- Effective income measures are defined in terms of access to convertible currency

Marketing-Mix in Emerging Markets
Product Positioning
• product policy a key issue • Customer needs tend to be basic and domestic alternatives weak

Pricing
• The balance between affordability and upper-end positioning • The lack of purchasing power means that the marketer often must find ways of offering a simpler product

Distribution
• Unless effective ways of distributing the product can be found or created, market entries might be thwarted and economic growth of the developing countries will not take off

Promotion
• Promotion in developing markets is initially limited because of lack of broadcast media

Marketing in China
China has a population of 1.2 billion people which is the largest in the world
• With its underlying strength in natural resources and able and disciplined worker the Chinese economy has so far been relatively untouched by the Asian Crisis • Despite the size and potential of the Chinese market its fast-growing purchasing power is still low • Market Segmentation
- Geographic region - Urban/rural split in the typical emerging market pattern

• Product Positioning
- The China market is open for global brands and standardized campaigns

Entry Barriers in China
Import License Controls
• The Ministry of Foreign Trade and Economic Cooperation (MOFTEC)

Protective Tariffs
• With the entry into the WTO, the government has promised to continue tariff reductions to meet the level of the other WTO members

Foreign Exchange Control
• Foreign exchange is controlled by the State Administration of Foreign Exchange Control

Foreign Trading Companies
• With ongoing reform, and WTO entry, the government-controlled trading companies have lost their monopoly

Marketing in China
Product Policies
• Chinese consumer buy foreign products because of no availability of similar products and the superior quality of foreign products

Pricing
• Most Chinese customers are price-oriented out of habit and are not willing to pay more for alleged superior quality

Distribution
• Most distribution channels are controlled by the government • Guanxi: Mutual good feeling and trust

Promotion
• Strictly controlled by the government

Westernization of Chinese Consumers
Christmas shopping is becoming more important than Spring festival Department stores use x-mas decoration like Santa Clauses, trees with lights, bells etc Trend across all generations and social classes

Importance of Guanxi
(good relations or connections)
“Guanxi seems to be the lifeblood of the Chinese business community, extending into politics and society. Without guanxi one simply cannot get anything done … with guanxi anything seems possible”
(Davis/Leung/Wong, Benefits of Guanxi, in: IMM, 1989)

To overcome distrust among partners, Chinese develop family-like links, more extensively than almost any other nation Family is a system of contacts rather than purely an emotional unit as in the West Individuals make decisions on the basis of family ties or social connections rather than objective issues Long-term not short-term phenomenon Requirements for Guanxi
• • Each party is fully committed to each other Honor your obligations
Source: Tang/Reisch; Erfolg in China-Geschäft

Cultural Differences

Present yourself

Highlight yourself Self confident Be dynamic and pushy Offensive, direct Inquisitive, active Engaged, emotional Collegial Confront conflicts Be more specific Dramatisize Reject, deny

Be part of a group Enjoy respect Be helpful, co-operative Defensive, indirect, discreet Hesitant, reactive Relaxed, patient Respectful, distanced Ignore Generalise Relaxed attitide Pull back; no direct feedback
Source: Tang/Reisch; Erfolg in China-Geschäft

Discussion behaviour

Conflict management

The Automotive Industry in China

China … land of extremes

China … land of extremes

The automotive boom will bring problems
People living in metropolitan areas = 480 Mill (=EU + USA) Only 1% of city residents own a car, though 32% intend to by one in the next 5 years As a consequence
• • • Pollution Traffic jams Cities get bigger and cars will be necessary to travel

Light Vehicle Sales in China

6

5

4

Over 1 mill passenger cars in 2002 and over 3 mill in 2008

3

2

1

0
1990 1992 1994 1996 1998 2000 2002 2003 (est) 2008 (est) 2019 (plan)

Source: J.D. Power & Associates; in: www.awknowlege.com; June 2003

Mio Units

Goal for 2019: Worldwide largest car market

30

Key figures of the Chinese car market
Around 100 automotive manufacturers
• Most produce less than 100.000 units pa

40 to 50 new models introduced in 2003 by foreign joint ventures Intense price competition
• Price declined by about 8% in 2003, following 7-8% in 2002

90% of car purchases are done by cash
• China´s local consumer financing companies have yet to provide sufficient and sophisticated lending services • Chance: new consumer groups can afford a car

Source: J.D. Power & Associates; in: www.awknowlege.com; June 2003

Taxi companies are key customers

Sales dominated by company (esp Taxi) and government customers; sales to private customers increase strongly
• Meanwhile over 50% private sales

Impact of World Trade Organisation
Opens the market and increases competition Classical Management functions become more important
• • • Marketing Human Resources Management Accounting

Local Production vs. Import
• Less market entry barriers

Wholly Foreign Owned Enterprises versus Joint Ventures Automotive impact
• • Less import tariffs from 80-100% to 25% by 2006 No import quotas by 2005
Licensing law: a limited number of license plates are released every month, which must be bid on at monthly auctions (ie October 2002 3,200 plates for an average price of US$ 3,500)

• •

Independent sales without Chinese Partners Foreign financial institutes are allowed to offer automotive finance Taube, Universität Duisburg-Essen Source: M.

Volkswagen´s investment into China
1978 first meetings of Volkswagen in China
Toyota and General Motors were first choice partner of China; however, both decided not to invest at that stage

1984 Joint Venture Shanghai Volkswagen Automotive Ltd
• • Sales 2002: 300.000 units Employees 2000: 11.000 pers

1991 Joint Venture First Automotive Works Volkswagen Ltd
• • Sales 2002: 210.000 units Employees 2000: 7.000 pers

Challenges of co-operative internationalisation strategies in China

Market
Lack of efficient legal framework Closed market
• • • • High tariffs Import quotas Chinese majority joint ventures Increasing local-content

Management
Different business styles and values Corruption Bureaucracy Language problems Different learning structures Difficult to find skilled staff

Source: Mercado Solutions Asia Ltd. 2000; Bennett 1998, p. 190; Posth/ Bergmann 1995

Joint Ventures from a non-Chinese car manufacturer’s view
Pros
• • • Market entry into protected market Lower tariffs Contact to local authorities

Cons
• • • • • • • • Long starting process Difficult to manage and lead Lack of skilled personnel Must buy parts locally Knowledge transfer Difficult to control sales and service network Image of locally produced product Danger of know-how transfer not only from foreign joint-venture to chinese partner but also to other foreign investors
- FAW: Volkswagen, Toyota, Mazda - SAIC: Volkswagen, GM, Isuzu

Case 3.2 Levi Strauss Japan K.K. Selling Jeans in Japan
DISCUSSION QUESTIONS:
1. What are the key success factors (KSFs) in the Japanese marketplace? 2. To what extent do the Levi Strauss' FSAs and CSAs match the KSF's. How has Levi's been able to leverage its country-of-origin to become a leading brand? Can other American jeans do the same? 3. How would you explain the apparent success of LSJ's advertising campaign stressing American values in Japan? 4. List the pros and cons of the different distribution alterna-tives facing LSJ. Which one do you think has the best chance of succeeding? 5. Would you retain the premium positioning of Levi's in Japan? Why/Why not?

Weekly Programme

Objective

Topics

Readings

WEEK 1: Introduction: Fundamentals of International Marketing WEEK 2: Market Entry Options WEEK 3: Local Marketing

WEEK 4: Global Marketing (I) Brand and Product Strategies
Standardization Discuss the emergence of standardized global brand and product marketing strategies Brand Management Product Strategy ext: Chapter 11-12 ase: Disney in France; in Hill, International Business

Global Services WEEK 5: Global Marketing (II) Price, Distribution and Advertising Strategies WEEK 6: Salesforce Management and Marketing Organisation

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