International Marketing 463-441 Lecture 3 The Basic Tools of Marketing Redefined in the International Context
Jan 19, 2015
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)
http://www.brandingstrategyinsider.com/all_of_derricks_posts/index.html
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