International Marketing (Project plan-Entry plan for an SME)

Building the knowledge base

Learning objectives 1. Understand the role research plays in

international marketing. 2. Discuss the role of secondary research in

international marketing. 3. Evaluate the use of primary research in

international marketing. 4. Realise the importance of an international

information system.

The ‘systematic and objective identification, collection, analysis and dissemination of information for the purpose of assisting management in decision making related to the identification and solution of problems and opportunities in marketing’.

Market research defined

• Links the consumer, customer and public to the marketer through information

• Helps to improve decision making • Helps to solve marketing problems

Evaluating secondary data

7

Key Considerations

for Using Secondary

Information

Relevant

Current

Impartial Accurate

Kotler, P., Brown, L., Adam, S., Burton, S., & Armstrong, G. (2018). Marketing. French Forest, NSW: Pearson Education.

Quality of data source. Quality of data (i.e. accuracy, current)

Compatibility and comparability of data

Sources of data • Governments and government

websites • International organisations; for

example, UN, UNCTAD, WTO, IMF, OECD, WB, APEC and ASEAN- FREE DATA

• Service organisations; for example, banks, accounting firms, freight forwarders, airlines and international trade consultants

• Trade associations such as trade clubs, and domestic and international chambers of commerce

• Directories and newsletters • Electronic information services such

as online databases and search engines, and news agencies

• Other firms and distributors

What information would the brand Starbucks wish to have before entering a new market- say Sri Lanka?

What information would Fonterra (dairy) wish to have before entering a market?

What kind of data would you use to answer some of these questions in the first instance?

Recognising the need for research, along with an international marketing plan – what kind of data would you use to answer some of these questions in the first instance?

Is there a market for your product/service- take coffee as an example here?

Data Relevance Accuracy- Source

Current- Timeline

Impartial- Source

Global/regional coffee consumption?

??

Export of coffee by country?

??

Import of coffee by country?

??

What kind of data would you be looking to use?

Sources of data- My two top choices

Criteria Statista ICO

Relevance √ √

Accuracy √ √

Current 2018 2018

Impartial √ √

Cost !!!!!!!!! Free

Countries in Asia with highest coffee import

The primary research process

• Fills specific information needs • Used for strategic marketing plans • Analysis of international segmentation variables • What is the market potential for our product? • How much does the typical consumer spend on our

product? • What will happen to demand if we raise the price of

our product? • What effect will new packaging have on ‘green’

consumers?

Research on the web • Web-based research is a

natural means for gathering consumer information quickly and cost-effectively: – low barriers to entry – email-based surveys – polling

• Use social networks to access particular consumer groups

• Lack of confidentiality • Cultural differences matter

Summary By now, you should be able to:

1. Understand the role research plays in international marketing.

2. Discuss the role of secondary research in international marketing.

3. Evaluate the use of primary research in international marketing.

4. Realise the importance of an international information system.

Foreign market entry strategies

Learning objectives 1. Explain why firms internationalise. 2. Reflect on how firms internationalise. 3. Evaluate exporting as a market entry strategy 4. Examine the factors influencing foreign direct

investment. 5. Identify the differing perspectives on foreign

direct investors.

Why firms internationalise • A variety of motivations push and pull firms to the

international path • Proactive motivations – because they want to

• i.e., Amazon in emerging markets, Uber. • Reactive motivations – because they have to

Why do firms internationalise?

1. Proactive Stimuli a. Profit advantage b. Unique products c. Technological

advantage d. Exclusive information e. Economies of scale f. Market Size

A. Reactive Stimuli i. Competitive Pressures ii. Overproduction iii. Declining domestic

sales iv. Excess capacity v. Saturated domestic

markets vi. Proximity to customers

and ports

In your opinion what is the internationalization stimuli for the following organisations?

• Starbuck’s becoming global [1a, 1f, Ai, or Av] • Unilever reaching rural markets in emerging

countries [1b, 1f, Aiii or Ai] • Apple going overseas [1a, 1b, Aiii, Av] • Tesla going international [ 1b, 1e, Ai, Aii] • H&M going international [1e, 1f, Aii, Av]

Exporting • Usually a firm’s first foreign entry strategy, popular with SMEs • Low risk, low cost and flexible. • When we talk about trade - trade deficits, trade surpluses - we’re

talking about exports / merchandise. • Important to be prepared before entering the export market • Australia has its success stories, i.e., Blackmores, Bundaberg

– https://asialinkbusiness.com.au/research-resources/case-study-bundaberg

https://asialinkbusiness.com.au/research-resources/casestudy-beerenberg

Does Singapore export more products and services or imports more products and services?

Exports & Imports in Singapore

With short product life cycles, a company has to capitalise on its assets as much as possible in the short-term

Trademark licensing An arrangement in which the owner of intellectual property grants another firm the right to use their trademark for a specified period of time in exchange for royalties or other compensation

The Hello Kitty brand is licensed to many different product manufacturers, including stationery, school accessories, clothing, cosmetics and room décor – that turn up for sale around the world

Barbie vs Susi in Brazil Why do you think Mattell’s Barbie ended up with a competitor Susi?

1. An employee left Mattell and used his knowledge of the company and Barbie to develop a Brazilian substitute of Barbie

2. An existing company in Brazil used their knowledge of Brazilian culture to develop a competitor product

3. A company stole the license of Mattell to develop a competitor product

4. Mattell gave the creator of Susi doll the license to create SusiMattel granted a license to a Brazilian

firm to market Barbie dolls, who then faced a competitor in the form of the Susi doll.

Franchising • The franchisor grants the franchisee the right to do business

in a specified manner: – manufacturer–retailer systems (e.g. car dealerships) – manufacturer–wholesaler systems (e.g. soft drink

companies) – service firm–retailer systems (F&B chains, professional

services) • Many companies have a master franchising system:

– foreign partner screening process – success is not guaranteed

Licensing vs Franchising Licensing examples Franchising examples

What is the main difference in the examples listed under the two foreign entry strategies?

Why are the fast food companies primarily using franchising & not using licensing?

1. Because they can source ingredients locally 2. Because the can hire local people 3. Because of the specific service business model they

operate 4. Because they need to adapt the food to local tastes

and preferences

Foreign direct investment (FDI)

• The greatest commitment • Carried out by multinationals • Maintains a degree of control • A major avenue for foreign market entry and

expansion

Reasons for FDI • Marketing factors: • Desire for growth • Political know-how and influence • Operate abroad as a domestic firm • Resource seekers look for natural or human resources • Market seekers look for better opportunities • Efficiency seekers look for economic sources of production • Derived demand: • As the demand for a firm’s products/services increases globally, other firms

(i.e. their suppliers) will also experience increased demand • Suppliers often invest abroad • Government incentives: • Governments need to provide jobs; fiscal incentives; for example, tax credits;

financial incentives; for example, land, buildings or loans • Non-financial incentives; for example, guaranteed government purchases and

special protection

Resource-seeking

15-37Petroleum industry

Coke investing in transformed Myanmar

Click to play video

What issues are Coca Cola facing in Myanmar?

1. Myanmar is still skeptical about foreign companies 2. Supply chain infrastructure 3. Ability to localize the product 4. Local partner is not competent

Joint ventures & Strategic Alliances (Ownership-based market entry strategies)

Joint Ventures • Advantages:

– governmental restrictions, reduction in control exerted by foreign firm

– commercial considerations, pooling of resources

– better relationships with government, local authorities or trade unions

• Disadvantages: – governments’ FDI

inexperience – relationship maintenance – partner loyalty – profit-related disagreements

Strategic Alliances

• A specific form of joint venture: – ongoing flexibility – helps to develop markets – defends home markets – spreads costs and risk – transfers technology – blocks competitors Guidelines: – Find the right partner. – Evaluate the effects on strategy

and competitiveness. – Adapt to market conditions.

Toyota and Mazda, joint venture

Click to play video

What are the motivations for this Toyota and Mazda joint venture?

1. Resource sharing 2. Tapping a new market 3. Profit sharing 4. Dominate the Asian automobile market 5. Overcome government restrictions in Asian markets

https://www.danone.com/

Joint ventures – market entry mired in conflict

https://en.wahaha.com.cn/

Summary By now, you should be able to: 1. Understand why firms internationalise. 2. Reflect on how firms internationalise. 3. Examine the factors influencing foreign direct

investment. 4. Identify the differing perspectives on foreign

direct investors.