International Marketing

International Marketing

Slide I – Marketing and Marketing Plan

Marketing is necessary for a company to satisfy client’s needs in a profitable way. It takes into account

products, services, communication, distribution and prices.

Marketing is the study and management of exchange relationships. Marketing is the business process of

creating relationships with and satisfying customers. With its focus on the customer, marketing is one of

the premier components of business management

International marketing issues different cultures, different competitors (local ones are able to adapt

à

better the products to satisfy the needs of consumers), finding the right suppliers (quality of the products

depends also on suppliers), reliability of suppliers (Internationalization of the company is followed by the

internationalization of the suppliers), political and economical impact of governments (certifications,

authorizations to enter into a new market), foreign distributors (indirect channel) distortion of the brand.

What is marketing?

Marketing activities are necessary to satisfy the needs of their clients but always thinking about its

profitability.

The company has to reach balance between customer satisfaction and profit. If you want to satisfy your

customer you have to increase your costs, when you increase costs you decrease profits equilibrium? If

à

you have an advantage in term of increasing revenues you can also increase costs, if you increase costs and

don’t have impact on revenues you’ll then decrease of profits. Only if you are profitable you can invest

money in marketing research and be successful in the long term, on the other side, to be successful in the

long run you also have to maintain customer satisfaction. If you do not satisfy 1 consumer you need to satisfy

at least 3 other ones to maintain market share.

When a company produce a product and have to sell it to the market, they have to create the customer

experience (B2B and B2C): This is a way to satisfy the needs of consumers and create satisfaction and

profitability for the company. So, the things a firm should do in producing and marketing a product or service

are:

Þ Analyse needs

Þ Estimate demand (big investments on new markets are done only if the demand is big enough to

give you a profitability

Þ Calculate BEP

Þ Evaluation of market potential in foreign markets

Þ Estimate competition (degree of competition for a specific products, which are competitors and if

they are heavy)

Þ Determine What (product), Where (distribution), (Marketing Mix and 4P)

Þ Estimate price

Þ Decide promotion

Þ Provide Service 1

Who is performing marketing activities?

Producers have to sell to consumers, however the link between these two is influenced by the actions of

actors who are also outsiders.

These people, that perform marketing functions and influence the company are:

Þ Transport Firms: responsible for distributing products without ruin them

Þ Internet Service Providers

Þ Product Testing Firms: responsible, together with the

firm, in creating good products for final consumers

Þ Research Firm

Þ Retailers: display of the product in the store

Þ Wholesalers: important because they create an

assortment for retailers, they buy products from the

companies and take title for the product: they sell and

can decide to increase/decrease prices etc.)

Þ Advertising Firms

Þ Other Specialists

The marketing system

It is the network of buyers, sellers and other actors

that come together to carry out marketing related

activities. This is why it is strongly connected to the

company. The elements composing it are:

• Suppliers: have an impact on the quality of the

product (ex. high quality suppliers and raw

materials; reliability of suppliers respect to the

expiry term)

• Competitors: can influence the marketing

strategy of the firm; they must be considered

with caution

• Channels of distribution: they are important since they are fundamental for marketing strategy and

creation of brand image (ex. product positioning inside the retailers’ shop, wholesalers big sale on

price ruin the image of the product)

• Macro-environment: linked to the 5 Pestel dimension (political, economic, socio-cultural,

technological, environment and legal), it is in many cases impacting on strategy and decisions to

enter or not a certain country: impact of technology development of a country (cost of adaption),

physical characteristics of temperature/weather [termo resistant Nutella – chocolate and oil;

clothing], mountains/flat region [transport/logistics costs – small/big trucks], political

characteristics [joint venture and franchising due to political barriers to entry – forcing to have local

partners in order to do an investment on a country – certification and permits necessity –

MERCOSUR Taxes], cultural problems [ex. Zara and muslim culture burka], economic variable

[demand, affordability of the product – accept unprofitability hoping for a future gain after the

development of the country – positioning the brand, development of a distribution network etc. à

L’Oreal and PeG financial strength to balance profits and losses – adapt the product and decreasing

cost of production for being able to sell it at a lower price – create economies of scales selling the 2

new products and also to the yet existing markets], socio-cultural tastes, social variables related to

education levels, sizes of the families, characteristics of society connected to culture.

Marketing Plan: It is part of the business plan: mission, vision, general goals and objectives) to define which

activities are suitable to operate in different countries. All the documents that are planning for the different

areas of the company. Different marketing plan for each combination of products and markets - all MP

have to be coordinated (Accor: Ibis, Mercure, Sofitel - n1 in Eu - high standards maintained for all the

segments)

Before creating it you have to define:

I. The size of a company (global, international etc)

II. The combination of products and segments/markets (one Marketing plan for each) - HORECA,

privates/retailers

III. The number of years that you’re taking into consideration - long term or short term decisions

So, it is essential to establish an Executive summary: Brief summary of the main goals and recommendation

of the plan for management

review

Contents of a marketing plan:

• External analysis:

Describes the market and

its characteristics, the

segments of consumers

and the company’s

position in it, including

information about

product performance,

competition, distribution

and the macro-

environment. The information focuses on the market (size, potential), segmentation (consumers

interested in your company) consumers (buying behavior - impact of culture on the marketing mix,

shopping habits - impacting on price, distribution, packaging, prod. adaptation, advertising), market

systems (retailing, marketing, advertising agencies), competitors (competitive analysis, PORTER

Model), Macroenvironment (PESTEL, cultural distance) —> are you able to target that segment

with your resources?

• Internal analysis: Describes the internal analysis of the company, so the marketing, economics and

operational processes. Like, how much money do we have (economics)? Marketing capabilities

(Are you able to create brand value? do you know how to deal with national TV? Communication

department? are you able to deal with advertising agencies?), Marketing culture (production

oriented or importance of marketing? 2nd/3rd generation companies trying to change the culture

of the company adding marketing culture), operational processes (production capacity coherent

with target market, quality of production targeting specific segments)

From the external and internal analysis of the company, it’s possible to develop the SWOT analysis:

à

point out your witnesses and strengths, opportunities and threats of a company. 3

• Develop a Marketing Strategy: It is the section of the marketing plan that outlines the overall plan

that the company wants to achieve. This includes objectives, targeting, competitive strategy and

positioning.

Objectives: States the marketing

- objective that the company would like to

attain during the plan’s term- Maximize

profits (measure of efficiency), market

share (volume: total units of products

sold by the brand/total units sold in the

market; value: total sale of a

company/total sale of the market;

relative: comparing market share of a

brand with market share of competitors -

leading company/2nd competitor or

your company/leading company how far

you are from the nearest competitor)(increase profitability and be able to maintain your

position in comparison with the evolution of the market in order to maintain your market

power - important because of negotiation power with retailers, suppliers and distributors, price

setter, control the market), Sales2 (efficacy - they determine market share - be able to increase

profitability but also revenues), brand awareness (spontaneous - what brands you remembers

[top of mind]? - or solicited - do you know that it exists? —> have to be measured to be real obj

by marketing researches), brand loyalty (convince consumers and keep the customers through

satisfaction), (qualitative objectives) —> budget determination: revenues and profits

(quantitative objectives)

Targeting: Target Marketing involves breaking a market into segments and then concentrating

- your marketing efforts on one or a few key segments consisting of the customers whose needs

and desires most closely match your product or service offerings. How many targets?

Concentrated, Differentiated, Undifferentiated. Concentrated strategy consists in choosing to

target only one segment of the market; this method is typical of small companies or companies

that have developed a core competence on a specific product (niche strategy: only mountain-

bikers etc.). In this case the customer satisfaction is high, however the risk is high too, because

if the market declines or disappears, you will fall down with it; companies targeting only one

segment usually prefer to target that niche in different countries (spread the risk). The

differentiated strategy, instead, recognizes different target consumers (women, men, kids) and

creates a specific marketing plan for each one. We will have differentiated products (depending

on the target customer) and differentiated marketing. For example Calzedonia Store, which

offers different type of socks, tights, etc (product very differentiated, not much differentiated

market). The last category, the undifferentiated strategy, tries to target every market with the

same strategy; in this case market is considered the goal and just one marketing mix is applied

for everybody.

Competitive strategy

- Positioning

-

• Implementation of the strategy through the marketing mix 4

The Ansoff Matrix (part of the marketing

strategy)

The Ansoff Matrix is a strategic planning tool

that provides a framework to help executives,

senior managers, and marketers devise

strategies for future growth.

It is named after Russian American Igor

Ansoff, who created the concept.

This strategy divides the market (y axis) and

the products (x axis) into existing and new

and it is made of four quadrants:

1) Market penetration (existing

products-existing markets) is the

safest of the four options. Here, you

focus on expanding sales of your existing product in your existing market: you know the product

works, and the market holds few surprises for you.

2) Product development (new products-existing markets) it is slightly more risky, because you're

introducing a new product into your existing market. These products must be accepted by

consumers and should not differ that much from the branding of the original producer.

3) With market development (existing products-new markets), you’re putting an existing product into

an entirely new market. You can do this by finding a new use for the product, or by adding new

features or benefits to it.

4) Diversification (new products-new markets) is the riskiest of the four options, because you're

introducing a new, unproven product into an entirely new market that you may not fully

understand.

From the 4Ps to the 7ps of the

marketing mix (part of the

marketing mix)

1. Product/Service

2. Price: the product should

always be seen as

representing good value

for money

3. Promotion: Advertising,

PR, Sales promotion,

Personal Selling and in

more recent times, Social

Media are all key

communication tools for an organization

4. People: all companies are reliant on the people who run them from front line sales staff to

Managing Director. Having the right people is essential because they are as much a part of your

business offering as the products/services you are offering

5. Process: the systems and processes of the organization affect the execution of the service. Well-

tailored process in place is fundamental in order to minimize costs. 5

6. Physical evidence: almost all services include some physical elements even if the bulk of what the

consumer is paying for its intangible

The marketing budget (part of the marketing mix)

Objective of marketing plans is to be profitable and so need to reduce the most the costs Marketing

à

plans have Budgets that need to be approved.

Need to first define:

1. Expected Revenues from marketing plan

2. Expected Costs from marketing plan

The marketing plan implies qualitative and quantitative decisions, necessary to grant profitability identify

expected revenues and costs time necessary to reach BEP

à

How to develop a budget?

1. How much money can I do in a market? Gross Sales Value

2. Profit before indirects: % of contribution required by the implementation of that specific plan

3. DDC: Cannot be eliminated/avoided, but only reduced (production, distribution, etc.)

4. What left can be splitter between Marketing Cots “MA” (long-term objectives) and Trade

Allowances “TA” (short-term objectives, too many discounts make loose brand image/value in the long-run,

discounts need to be limited).

a. TA: (Discounts, that need to be estimated on average %)

b. MA: are flexible, they can be eliminated/avoided/reduced but doing so will limits future

profitability in the long run, so efficiency)

Control (part of the marketing mix)

Control of results and define actions related to products that do not meet the company’s goals. 6

Slide II – Marketing Plans in the International Markets

Structure of marketing plan remains the same for both marketing plans at a national level and marketing plans

of a company operating in foreign markets.

—> different things to take into consideration for marketing research in different markets International

marketing is different from global marketing —> operate in different ways and have different approaches in

each different areas

Exporting companies: ethnocentric

approach (more or less they have something

like 70% of sales in home market, 30% in

foreign ones) = the culture of the company

consists on doing a good product for the

home country market and then trying to sell

it also abroad —> they mentality is more

focused on satisfying the domestic market.

Example: located in Italy, made in Italy

product exported to other countries without

adapting it to the new market, or they adapt

the Italian product to the foreign consumers

(if they really have to change something).

Differences in the marketing mix:

I. International segmentation of foreign markets (identify groups of consumers that are similar) is

made by identifying segments of consumers similar to the domestic market

II. Strategy consisting on thinking about the necessity or not of a distributor (depending on the

decisions about the strategy to take into consideration, the marketing mix changes)

III. Marketing mix is often standardized without only small adaptation to the foreign market

(adaptations are taken into consideration only if it is worth to increase costs)

IV. Goal: maximize the domestic market share Multinational companies: policentric

approach (they operate in each country in

a way they develop independent strategic

business units in each foreign market) —>

headquarter in the domestic market,

different subsidiaries in each foreign

market; the subsidiaries are completely

independent and they don’t develop

international marketing because the only

think about their market [today is difficult

to find pure multinational companies,

because they have a lot of disadvantages]

à Goal: maximize the market share in

each country in which they operate 7

Global companies: global approach, so the company can be located everywhere, it develops a product that

is good for the traditional segment of global consumers, considering the market as a whole. A company is a

global company also in the cases

where it splits the global market

in big regions (EU, US, Asia); for

example a company selling food

can be a global company but

cannot sell it in the entire world.

Example. Piccolini Barilla created

for other European countries but

sold also in Italy. CocaCola is the

same product worldwide but the

American one is more sweet than

the Italian one.

Differences in the marketing mix:

I. Global segmentation (world or big regions) dealing with consumers with different cultures etc, so

when they develop a global product they take into consideration the characteristics of the

nationality prevalent in each segment of consumers

II. They consider a region as a country: no problems of exporting or entering the market

III. Global positioning: maximize market share in the global segment

A part from this three categories there exist some hybrids: companies that are multinationals but have

characteristics of global companies, companies that are exporting companies that are becoming global

ones e