International Marketing 463-441

Lecture 3The Basic Tools of Marketing Redefined in the International Context

1. The Marketing Mix CRM 2. Analytical Tools

3. Consumer Behaviour Models4. Channels

5. Consumer, B2B, Direct, Retail Marketing, etc

A revisit to the basic tools of marketing in the international context

The International Marketing Toolkit

An Overall View

Chemical Raw Materials Packaging

Style

Branding

Promotion

Finance

Logistics

Company Fit Manufacturing Processes

Competencies

Competitors

Material Availability

Sourcing

Trends

Tastes

Technology

International Markets

Domestic Market

Relative Competitive Advantage

Channels

Regulation

Feedback

Feed forward

PEST Analysis

• Political Analysisa) Political stabilityb) Risk of military interventionc) Legal framework for contract enforcementd) Intellectual property protectione) Trade regulations and tariffsf) Favoured trading partnersg) Anti-trust lawsh) Pricing regulationsi) Taxation – tax rates and incentivesj) Wage legislationk) Work weekL) Mandatory worker benefitsM) Industrial safety regulationsN) Product labeling requirements

• Economic Analysisa) Type of economic system in country of operationb) Government intervention in free marketc) Comparative advantages of host countrye) Exchange rates & stability of host country currencyf) Infrastructure qualityg) Skill level of workforceh) Labour costsi) Business cycle stagej) Economic growth ratek) Discretionary incomel) Unemployment ratem) Inflation raten) Interest rateso) Income distributionp) Poverty rate

• Social Analysisa) Demographiesb) Class structurec) Educationd) Culturee) Entrepreneurialismf) Attitudesg) Leisure interest

• Technology Analysisa) Recent technology developmentsb) Technology impact on product offeringc) Impact on cost structured) Impact on value chain structuree) Rate of technology diffusionf) R&D activity

Major PEST Trends in Asia

• Political factorsa) Growing acceptance of the benefits of free trade and foreign investmentb) Increasing resistance by non-government organisations to ‘globalisation’c) General reduction of political risksd) Major regional and other free trade agreementse) Government protection of domestic firms and industries decreasing and becoming less effective

• Economic factorsa) Fewer barriers to trade, investments and financial flowsb) Increased trade and investment flowsc) Improved institutional frameworks for business, trade and investmentd) Continued growth of China, the emergence of India e) Growing risk of contagion within and across regions during economic and financial crisis

Major PEST Trends in Asia

• Social Factorsa) Increasingly educated, trained and competetent consumers and populationsb) Continuing convergence in consumer needs, desires and wantsc) Grow of disposable income in East Asiad) Easier and greater movement of skilled manpower within and outside Asiae) Emerging pressures on corporate social responsibilityf) Long term trend of aging populations in some countriesg) Higher proportion of female graduates than males

• Technological Factorsa) More rapid and disruptive changes in technologyb) Greater ability of emerging economies to utilise and absorb technologyc) Widespread diffusion of information and transport technology d) Changing ‘make or buy’ decisions and less defined firm boundaries

An Analysis of Culture and Change

Geography(Climate, Topography, Flora, Fauna, Microbiology)

History

Technology and Political Economy

Social Institutions(Family, Religion, School, Media, Government, Corporations)

PeersElements of Culture

(Values, rituals, symbols, beliefs, though processes

Consumption decisions and behaviours Management Styles

Consequences

Ad

apta

tio

n

So

cial

isa

tio

n

Ap

pli

cati

on Imitation

Market Structure

Adapted from Cateora & Graham P. 99

Economy(Central)

SocialCultural

Political legal

Technology

Market

Immediate

Primary

Incremental

Ultimate

Regulation Educa

tion

InspirationCre

ation

Accomm

odation

AdoptionDestruction

Decon

struc

tion

Kotler, et. Al., Think ASEAN

Adapt

ion

RationalizationAcceleration

Coordination

Redefinition

Realization Formation

The Forces of Change in the

Business Landscape Digitization

Globalization

FuturizationPeace

(Regional Peace and security)

Prosperity(Economic

integration and cooperation)

People(Human and social

development๗

Economy Social-CulturalPolitical Legal

Technology

Market

Certain/Uncertain Important/Unimportant

ChangeValue Migrator

TOWS Examination

Value Determiner

CustomerCommitted, Lost, New

Value Decider

Company Existing competence,

Risk, Attitude, Stretch Possibility

Value Supplier

Competitor Winner, Loser,

Emerging

Go invest No-Go/Hold

Harvest Divest

Choice

Kotler, et. al, Think ASEAN P. 6

The Diamond 4C Sub-Model

Strategic Opportunity to Exploitation

Ideas Opportunities Solutions Realisation Performance

Spots Evaluates Selects Targets

Creativity Innovation Strategic Thinking

Management Capability

Capabilities Governing Competitive Scope

Competitive Advantage

Costs: to customers Knowledge: Industry/market/technical/p rocess Relationships: Customers/suppliers/distri butors/relative power Structure: Ability

Differentiation

Competencies Entrepreneurial, Opportunity

Identification, Network, Conceptual, Organisational, Strategic, Commitment,

Resources

Where the business is

currently performing

The base potential for development

The process of product/market development

The Outcomes

(potential targets)

Siz

e an

d de

pth

of c

hang

e

Tim

e

Key internal influences on the development process

Key external influences on the development process

Gibb & Scott 1988

Pioneers Early followers

Early

Majority

Late

Majority

Late

Followers

Product LifecyclePotential Profitability

Time

Concept

Risk Taking

Competitive

Risk Taking

IP Value &

NoveltyIP Value

Prof

it

Performance Base

Profile of business in terms of performance:

• Market trends: current product mix, market mix, competition

• Production trends: Utilisation, efficiency, quality

•Financial and Management: net worth, liquidity, gearing, trends

Key internal influences on the development process

Administrative, marketing, production and Managerial resources and capabilities.

Key external influences on the development process

Competition, market restrictions

All influence the type of product and market development that will take place

Personal

Objectives

Business

Objectives

Strategies & Tactics

Operating

Needs

Products

Manpower

Finance

Operating

Budgets

Feedback loops

Business Analysis: Strengths and Weaknesses

Product: 4 Ps or 4 customer wants Profit/Cash flow: its sources and uses

People: Management and Skills Facilities: age, technology and utilisation

Environmental Analysis: Threats and Opportunities

Market: product position and prospects Competition: Traditional, new firms, new

industries, profits

Technology: Changes and developments The Economy: Growth, inflation, Law

Burns & Dewhurst 1993

Strengths

S

Weaknesses

W

SO Strategies

Use strengths to take advantage of opportunities

WO Strategies

Take advantage of opportunities by

overcoming weaknesses or making them irrelevant

ST Strategies

Use strengths to avoid threats

WT Strategies

Minimize weaknesses and avoid threats

Opportunities

O

Threats

T

Potential Strategies Identified through SWOT Analysis

Sources of Competitive Advantage

(The reason for any product development in a company)

Costs:Importance of price to customers, distributors, the extend of demand elasticity

Knowledge: Stage of industry lifecycle, common industry knowledge verses your own specialised knowledge

Relationships:Links with customers, suppliers, distributors, relative power

Structure:Appropriate organisational structures, Ability to respond to market, leadership.

Competitive Rivalries Lemongrass quick yield and straightforward to cultivate and distil – expect high elasticity of supply from both existing and new producers. Producers of substitutes very aggressive

Bargaining Power of Suppliers Collecting the most suitable planting material require effort. Extraction and harvest .technology needs to be acquired or developed Analytical equipment or service maybe expensive/remote.

Substitutes Citral (main constituents) can be produced from a number of chemical feed stocks. Alternative oils (litsea cubeba) cost much less to produce. Lemon myrtle oil much smoother and acceptable to end users Many alternatives to lemongrass in product formulations.

Trends & Technology Alternative technologies to steam distillation (CO2) can make much smoother oil but will increase capital needs greatly. Natural, exotic, organic, FAIRTRADE could increase oils popularity (?) if seen as exotic.

Substitutes

Tre

nd

s &

Te

ch

no

log

y

Bargaining power of buyers

Bargaining power of suppliers

Competitive Rivalries

Re

gu

lati

on

Regulation SCCP placed lemongrass oil under scrutiny as a cosmetic ingredient in EU.

Industry Competitors

Intensity of Rivalry

Bargaining Power of Buyers Currently small item of trade in flavour industry, strong relationships with established producers.

Actualisation

(The Artist) Self-fulfillment

Rice

Soap Fresh

Vegetables

Most Household Cleaning Products

Water Purifiers

Fashion Clothes (e.g. Jeans)

Chewing Gum

Car Air Fresheners

Travel & Vacations Fine Fragrances

Aromatherapy products Luxury cars

Nutraceuticals & herbs

Books Fine Dining & Processed Foods

Study after retirement Fresh vegetables (Organic)

Esteem (The Executive)

Achievement, prestige,fulfillment

Social (Worker) Family, relationships,

workgroups

Safety (The Farmer) Home, Security and stability

Physiological (The Hunter) Basic Biological Needs – Food, water, air

Staples: based on survival (fear)

Necessities: based on what is good (existence)

Community: (acceptance)

Responsibility: (hope)

Fulfillment: (dreams)

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Decision Framework

Investigate Market Further

Free Trade Arrangements

Political & Legal Situation

Market & Competition

Firm Capabilities

Partners & Channels

Potential Competitive Advantage

Potential to Continue

Market Access?

Competitive Advantage?

Capabilities?Sustainable Market Size?

Networks and Partners?

Access to channels?

Product ConceptsAcceptable?

YesYes

Yes

YesYes

YesYes

Geographic Market

Product Market

Timing of Entry

Entry Mode

Distant Close

Existing New

Early Late

Dependent Independent

Overseas Manufacturer

Importer/and or Agent

Master Distributor

Regional Distributor

Local Distributor

Wholesaler

Retailer

Consumer

Australia Malaysia Japan/Korea Hong KongChannel Depth

Stakeholders

Product/Channel/Market Models

The Branding Paradigm

The Level of Competition

The Channel of Distribution

Market Segmentation

Identify bases for segmenting the market

Develop segment Profiles

Market Targeting

Develop Measure of segment attractiveness

Select target segment

Market Positioning

Develop positioning for market segments

Develop a marketing mix for each segment

Major Segment Variables for Consumer Markets

Geographic VariablesWorld Region and/or country

City and/or regionDensityClimate

DemographicAge, gender, family size, family life cycle, income, occupations, education, religion, race, generation, nationality

PsychographicSocial class, lifestyle, personality

BehaviouralTypes of occasions and festivals, existing market cultures, user status, loyalty status,

concept readiness stage, attitude towards products

More for More

More for the same More for Less

The same for Less

Less for much Less

Price

More The Same Less

More

The Same

Less

Ben

efits

Possible Value Propositions