International Marketing

MKT303 International Marketing

Getting the product to the customer an international approach Workshop 10

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What will we be learning? Week Topic

1 Introduction to International Marketing

2 Political and economic factors impacting international marketing

3 Social and technological factors impacting international marketing

4 Legal and environmental factors impacting international marketing

5 Assignment presentations

6 Study week (Attendance is compulsory).

7 Trade relations

8 Culture and communications

9 Market entry – an international marketing approach

10 Getting a product to the customer – international context

11 Product management and surviving in an international market

12 Future of international marketing and ethics

Learning Outcomes 1. Identify how to sustain a competitive

advantage in new markets 2. Explore distribution strategies for new

markets 3. Understand the role of global supply chains 4. Analyse suitable methods to distribute

products or services to customers 5. Assess potential options for distribution

strategies

Why am I learning this?

Getting your products or services to customers successfully – can mean the difference between success and failure

As marketers you need to consider these factors.

Workshop Activity

Revision

What did we discuss last week? Identify the three main points that you’ve learned during

last week’s class.

Share your thoughts with the rest of the class.

This Topic’s Big Idea

“A product with better distribution will win over a superior product with

poor distribution or customer access” Stephen Davis

Establish a Competitive Advantage

Cost Leadership Differentiation

Cost Focus Differentiation Focus

COST DIFFERENTIATION

B R O A D

N A R R O W

Porter’s Generic Strategies

Apply this to the Global Context

According to Hao Ma, author China Centre for Economic Research, Peking University there are 4 determinants to the achievement of Global Competitive Advantage. The 4 Cs

Ma, H., 2004. Toward global competitive advantage: Creation, competition, cooperation, and co-option. Management decision, 42(7), pp.907-924.

Creation Competition Cooperation Co-option

Creation • Innovation is at the heart of

both strategy and entrepreneurship

• Fostering innovation requires: – Managerial initiatives – Innovative organisational

structures – Organisational learning – Supportive corporate culture – Creative human resource

management • Creates new products and

markets

• Watch the Google Office example: bit.ly/mkt303googlestaff

Competition • When the iPod & iPad

were released, they were first to the world technology

• Use of patents and trademarks to protect intellectual property

• Pre-emptive competitive advantage eliminates or constraints rivals’ options

• It limits, reduces or neutralizes rivals’ ability to create customer value

Source: Apple

Cooperation • Setting foothold in new

market/country • Pooling resources and

sharing risks • Sharing complementary

resources and skills • Learning from partners • Building alliances • Weighing options in

multiple alliances

• Various market entry modes allow foreign companies to cooperate with local companies

• Blends cultural/language knowledge, contacts and expertise

• Examples: Telstra and Telkom Indonesia forming telkomtelstra

Co-option • Strategic co-option

attempts to align other parties’ interests with that of the focal firm

• Provides opportunities by removing external obstacles or neutralizing threats

• Often via a third party to influence the firm’s fight with rivals

• Examples include joint lobbying on changing regulations or barriers to entry

• In Victoria: Firms are advocating to change laws prohibiting eScooters in cooperation with the RACV

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In groups of four to five discuss:

What are the advantages and disadvantages of these four options?

When would a firm consider their use?

Workshop Activity

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• Price is one of the factors that marketers can change

• Pricing strategies include: • Competitive pricing -

Pricing based on what competitors are charging

• Value Based pricing - Pricing consumers are prepared to pay based on the perceived value placed on products.

• Price penetration - Pricing based on what competitors are charging.

• Price skimming - Charging a high price initially due to the innovation benefits or product uniqueness.

• Product line pricing - Sell some product lines in the product category cheaper to stimulate sales & differentiate quality between products.

• Relationship pricing - Flexibility to modify pricing to develop long-term relationship.

Set and Adjust Pricing

Marketing Channels for Consumer Products

Manufacturer Manufacturer Manufacturer Manufacturer

Agents

Wholesalers Wholesalers

Retailers Retailers Retailers

Consumers Consumers Consumers Consumers

A B C D

Choose Suitable Distribution Direct selling though retailers through wholesalers through agents, wholesalers Eg. Online sales Eg. Clothing & retailers eg. Tourism & retailers eg. Tourism

manufacturer or supermarket items

Source: http://www.civilserviceindia.com/subject/Management/notes/designing-and-managing-marketing-channels.html

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• Coordinating buyer demand with product availability

• Facilitating negotiation between exporter and importer

• Protecting both buyer and seller from opportunistic behaviour by establishing trust

• Reducing transaction costs • Matching buyers and sellers • Facilitating transactions by providing relevant

information • Providing physical distribution/logistical

support

Role of Channel Intermediaries

Workshop Activity

In groups of four to five discuss:

Why would a firm modify its pricing for an international market?

What are the advantages and disadvantages of each method of

distribution?

Using Intermediaries Advantages: • Expertise in the marketplace • Contacts to sell the organisation’s goods and

services • Established retail system that increases exposure

Disadvantages: • Commission • Management time • Favouring to sell competitors goods and services

at times

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Distribution Strategies: Intensive

1. Intensive distribution

For widespread exposure, to place goods and services via as many distributors as possible.

Applies to lower priced goods eg. FMCG products

• Example Coca Cola

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Distribution Strategies: Selective

2. Selective distribution

With selective distribution, the manufacturer aligns with retailers that represent their level of brand positioning.

Fewer distribution channels than Intensive

• Example – Just For Pets

• Just For Pets represents independent retailers in the pet industry providing pet services.

• Pet Supplies, Pet Care, Pet Food, Pet Store, Domestic Pets.

• https://justforpets.com.a u/

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Distribution Strategies: Exclusive

3. Exclusive distribution

With exclusive distribution, the manufacturer will have few distribution channels that truly represent their premium brand

Focus tends to be on building the image of the brand and its exclusivity

• Example – Luxury products

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A. Manufacturer to Customer • Direct: Business to

Customer or Business to Business • The Internet has created

opportunities to reach customers directly

• Can reduce time to market and intermediary costs

• Need strong promotional campaign

• Require logistics to service customers

•

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B. Manufacturer, Retailer, Customer

• Example: Australian Manufacturer makes the clothes and then distributes through retail shops domestically and internationally

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Inbound International Tourism Distribution System

O/s Retailers

Airlines to Australia

Hotels in Australia

Australian Theme Parks

O/s Wholesalers

O/s Tourists

Inbound International Tourism Distribution System Cont.

Overseas Retailers – sell the packages that wholesalers distribute to them

Overseas Wholesalers – package up goods and services that make an Australian holiday

Australian Tourism Products – eg. Airline, hotels, restaurants & theme parks give a nett rate to the wholesalers to include them in tour packages

Workshop Activity

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Lunar Park Sydney

Whale watching Hotels

Discuss distribution channels used by these Hospitality and Tourism services – 10 minutes

Bridge climb Sydney

Agents

• Marketing intermediaries

• Engaged by buyers or sellers on an ongoing contractual basis to negotiate with other parties on their behalf.

• Often will have rights or exclusivity to represent the buyer or seller

Examples: • Manufacturers’ agents

– represent manufacturers either in domestic or International markets eg. College agents

• Selling agents – eg. Agents buying property for overseas buyers

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Channel Design Decisions • Analysing customer

needs – Size – Delivery times – Spatial convenience – Product variety – Service backup – Expected volume

• Establishing channel objectives – Costs – Timeliness – Available resources – Trust of networks

Channel Design Decisions Cont.

Identifying major channel alternatives

A channel alternative is described by three elements • available business intermediaries • number of intermediaries needed • terms and responsibilities of each channel member • types of target markets that channels attract.

Evaluating major channel alternatives

Workshop Activity How the 4-7 Ps help to determine the “Place or Distribution” of a product or service. • Case Study: Watch

bit.ly/mkt303frenchcakes and answer following questions

Group discussion questions: 1. What are the market factors to

be considered according to the YouTube about selling directly to consumers by the roadside?

2. How does the consumer needs and demand affect distribution channel decision?

3. How does the perishability of French Cakes affect the distribution channel decision?

International Distribution Decisions

Direct distribution (integrative) – company has vertically integrated overseas distribution

Indirect distribution (cooperative) – use of external overseas intermediaries

Advantages

-Direct control -Level of customer service -Problems easily identified & solved - Save on commission

Disadvantages

- Lower volumes of sales - Less exposure of products - High cost of promotion

- Use Distributors’ expertise in market - More exposure - More sales

- Less control - Pay commission - Your company not connected to the market - Dependency on distributors

Next Week

Product management and surviving in an international marketing.