This summary is based on the year 2013-2014.

Lecture 1

“Chapter 1+19” > Introduction to International Marketing

When consuming a product or service you experience a total concept ; = what you think and what you experience (knowledge of the brand for example). > Consumer psychology

The core of marketing is all about benefits VS features; the service or good is just the tool to create value

> So marketing is all about consumer loyalty! = positive link between consumer’s expected value and consumer’s experienced value. Expected = Experienced, or even better: Experienced exceeds Expected.

Organisation VS Consumer: how we see us as an organisation should match how consumer see us as an organisation.

Philosophies/Orientations/Concepts in marketing management:

Production concept > Product concept > Selling concept > Marketing concept > Societal concept ; so it goes from just transactions to consumers to relationships with consumers

Production concept: All about consumers liking that the product is available and affordable

Product concept: Is the idea that consumers will favour products that offer the most quality, performance, and features for which the organization should therefore devote its energy to making continuous improvements

Selling concept: is the idea that consumers will not buy enough of the firm’s products unless it undertakes a large scale selling and promotion effort

Societal Marketing concept: is the idea that a company should make good marketing decisions by considering consumers’ wants, the company’s requirements, consumers’ long-term interests, and society’s long-run interests

Chapter 1

And back to marketing:
Marketing concept: Is the idea that achieving organizational goals depends on knowing the needs and wants of the target markets and delivering the desired satisfactions better than competitors do

Marketing should be seen as a management philosophy, an orientation towards a competitive advantage > Global Marketing, Hollensen page 27

… And your marketing strategy should be oriented towards creating value for customers and capturing value from customers.; = Customer centricity! (Shah et al. Article)

International Marketing (what this subject is all about: “The multinational process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives”

… But are we as a firm ready to go international? → Hollensen figure 1.6
And what makes international marketing so different? ; different environments, political systems, cultures, marketing infrastructure, competition, etc.

And to what extent should you be global? Because customers don’t want all standardized products and marketing that works in one country maybe does not work in another. That’s what brings us to the idea of ‘Glocalization’ → See Global Marketing, Hollensen
 

Chapter 19

International marketing:
Domestic marketing > Export marketing > International marketing > Global marketing
Where:

Export marketing = ethnocentric

International marketing = regiocentric/polycentric

Global marketing = geocentric

These ‘levels of marketing internationalisation’ have an effect on the company’s structure:
Ad hoc structure
Functional structure

International divisional structure

Geographical/product structure
Matrix structure

> For definitions see Global Marketing, Hollensen

Wrap up lecture 1:

- Find sustainable competitive advantages

- Originating from any part(s) of the value chain embedded in a organization structure that fits the market (and firm’s philosophy)

- Focusing on customers, competitors, and strategic alignment (i.e. market orientation / customer centricity)

- So that value is created for the customer (customer value), and value is captured from the customer (customer equity)

- Laid down in an (international) marketing plan

- Leading to an (internationally) competitive and profitable organization.

Lecture 2

 “Chapter 4+6+7” > Emphasis on EXTERNAL analysis

Chapter 4

How to find the right marketing strategy for high Customer Perceived Calue (CPV)?

CPV = Get/Give

> product benefits + service benefitsdirect costs + indirect costs

Indirect costs are the ‘customer journey’ ; “I want it” towards “I have it and I use it”

When making a SWOT-analysis for a new marketing strategy, keep in mind:
- The value net ; Consisting of a vertical network (suppliers and customers) and a horizontal network (competitors) See Global Marketing, Hollensen figure 4.10

- External analysis:

• Customer
• Competitor
• Market/submarket analysis → Porter’s diamond and Porter’s Five Forces model
• Environmental analysis via DEPEST

• Meso- actors: competitors, distributors
• Macro-forces: Demographics; Economic; Political / legal; Ecological; Socio-cultural; Technological [DEPEST]

The external analysis can make you come up with opportunities (O) and threats (T)
- Internal analysis

• Performance analysis
• Marketing strategy

• Segmenting, Targeting → Lecture 3
• Positioning → Lecture 5

• Marketing mix

The internal analysis can make you come up with strengths (S) and weaknesses (W)

Porter came up with a market/submarket analysis, which are the basis for competitive advantage. A three stage model for CA;

1. Analysis national competitiveness (Porter’s diamond)

- Home nation characteristics on firm’s success

2. Competition analysis (Porter’s five forces)

- Profit potential industry

3. Competitors:

- Competitive triangle

- Benchmarking

Chapters 6+7

Trends in the market: What is going on? (Dynamics)  

- Uncertain economy

- Rapid globalisation

- Sustainability; be environmentally conscious

- Social networks; competitive disadvantage if you as a company do not join a social network

- Demographics; aging? wealthy baby boomers? more-than-one-person-households?

- Demand side;

• Consumer sees no differences between products
• Consumer uses simpler choice processes: less interest and low involvement buying behaviour
• Individualisation, moment consumer
• Consumer is more rational and wants to be ‘happy and free’ (Millennials > Gen Z)

- Supply side;

• E-business
• Mondialisation
• Markets more transparent, more data
• Products/services more and more similar
• Product life cycles shorter and shorter
• More competition

Differences between markets (Status Quo)

- Economic forces; level of development “Big Mac Index” >  See Global Marketing, Hollensen ch. 6

- Political forces; unrest, laws, corruption, trade marks, patents > See Global Marketing, Hollensen ch. 6

- Socio-cultural forces; origins of culture + elements of culture + behavioural consequences

> See Global Marketing, Hollensen ch. 7

• Characterists of culture, things you should take into account

• Communication and language
• Sense of Self and Space
• Dress And Appearance

• Food/Eating Habits
• Time consciousness
• Family and friends
• Values and norms
• Beliefs and attitudes
• Business/Work Habits

• High context and low context
• Hofstede and his dimensions + critics!!

Lecture 3

“Chapter 8” > Emphasis on INTERNAL analysis

Recap:

- Internal analysis

• Performance analysis
• Marketing strategy

• Segmenting, Targeting ; dividing the market and choosing target segments
• Positioning → Lecture 5

• Marketing mix

The internal analysis can make you come up with strengths (S) and weaknesses (W)

You should build a Global Marketing Plan (Global Marketing, Hollensen, fig 2.1)

Build around the 5 main decisions in global marketing:

1. The decision whether to internationalize > Framework discussed in lecture 1, Global Marketing, Hollensen figure 1.6  

2. Deciding which markets to enter > Today

3. Market entry strategies > Lecture 4

4. Designing the global marketing programme

5. Implementing and coordinating the global marketing programme

Who are your customers?

1) Consumer decision process

• Need recognition
• Information search (“Where??”)
• Evaluation alternatives (“How am I in the eyes of my consumer??”)
• Purchase decision
• Post purchase behaviour (“Is my consumer satisfied??”)

2) International market segmentation

• Figure 8.2
• Step 1: “Segmentation is the process of dividing the world market into distinct subsets of customers that have similar needs”

• General characteristics of the market
• Specific characteristics of the market

• Step 2: requirements for effective segmentation ; Measurable, Accessible, Substantial, Actionable
• Step 3: Macro-segmentation, screening the segments

• Preliminary
• Fine-grained > ABC countries > Global Marketing, Hollensen

• Step 4: Micro-segmentation

• Consumer styles       

3) International market selection, targeting

“Targeting aims at evaluating and comparing the identified segments in order to  select the one (or more than one) segment with the highest potential.”

Finally: We segmented and targeted; how to enter the market? In other words… What market expansion strategy to choose? Incremental VS Simultaneous and Concentration VS Diversification. See Global Marketing, Hollensen for in depth theory and definitions  

Lecture 4

“Chapter 9+11+12”  > How can I serve my customer best?

So, I have segmented the market in a meaningful way (Lecture 2+3), how to be remembered? (= Positioning) And how to enter the international markets?

Positioning = “the location of a product in the consumers’ mind”. Visualised by a positioning map. Positioning maps show consumer perceptions of brands vs competing products on important buying dimensions.

… You want to achieve the best location in your consumer’s mind in order to achieve the greatest customer equity. Strategies;

- By Product Attribute(s)

- By its Benefits

• Effective statements: what is the benefit of the product and how is it different

- By Usage Occasion

- By Users

- vs Competitors

- As a Substitute

- Combinations of the Above

Rational positioning = Positioning based on a product’s concrete functional benefits

Emotional positioning = Positioning is based on higher level emotional needs, with more emphasis on image

Entry strategies… ;
- Indirect strategies VS Foreign Direct Investment (FDI) strategies

- Export modes (ch.10), intermediate modes (ch. 11) and hierarchical modes (ch. 12)

Export Modes
‘Production in home or third countries, products transferred directly or indirectly to host market. The central question: Which functions controlled by external agents, which by company itself?’ > Partner Mindshare

Partner mindshare = The measurement of the strength of a relationship between manufacturer and export-partner in terms of trust, commitment and cooperation. Keep in mind that partner mindshare affects your brand image, so be selective!! → Use framework, See Global Marketing, Hollensen, figure 10.4  

- Indirect export

- Direct export

- Cooperative export

Chapter 11

Intermediate modes = ‘No full ownership by the parent firm! It can be shared (Joint Venture) or contracted (Licences, Franchises). Done to share knowledge and skills.’

Chapter 12
Hierarchical modes = ‘Firm completely owns and controls the entry mode. Requires huge investment and risk, but greater influence and control over (local) marketing’

- Level of responsibility over value chain functions to local management, depending on orientation:

• Ethnocentric
• Polycentric
• Regiocentric
• Geocentric

Of course, also adapt structure to orientation > Lecture 1

Every entry mode has positive sides and negative sides.
Licensing

Advantages

- Quick expansion (entry) when capital is scarce

- Very low risk

- Allowing host country to gain technology and create jobs

- Allowing host country and licensee to keep most profit

- Circumventing trade barriers

Disadvantages

- Very low profit

- Licensee becoming future competitor

- Licensee's poor performance: image

- Difficulty in terminating licensing agreement

Franchising

Advantages:

- Overseas expansion with a minimum investment

- Franchisees’ profits tied to their efforts

- Availability of local franchisees’ knowledge

Disadvantages:

- Lack of control over the franchisees’ operations

- Problem in performance standards

- Cultural problems

Joint Venture

Advantages:

- Maximizing profit while minimizing risk

- Sharing of resources

- Allowing host country to gain technology and create jobs

- Circumventing trade barriers

- Local partner's market knowledge

- Local partner's political connections

Disadvantages:

- Conflict with partner

- Sharing of profit

- Loss of control

- Difficulty in terminating relationship

Local Manufacturing

Advantages:

- Job creation for host country

- Host country gaining resources (capital and technology)

- Low trade barriers

- Higher profit

- Utilization of local labor

- Host country's economic incentives

Disadvantages:

- Expropriation risk

- Large capital investment

Lecture 5

“Chapter 14” > What should I think about when aiming my strategy at product?

Marketing programme:

• Strategy

• Segmenting > Lecture 3
• Targeting > Lecture 3
• Positioning > Lecture 4+ today

• Marketing Mix

• Product > Today
• Price > Lecture 6
• Place > Lecture 6
• Promotion > Lecture 7

Recap lecture 1: When developing a product you should think in solutions and benefits for your consumer.

The ‘P’ of product is defined by: core product benefits, product attributes and support services. See Global Marketing, Hollensen figure 14.1. Ability to standardise goes from high in core product benefits to low in support services.

> Support services are seen as a source for a core competence

> In figure 14.1 in the book, price and staff behaviour are not an example of a product attribute. See slides for the correct figure 14.1 by dr. Voerman

Brand equity = the premium a customer / consumer would pay for the branded product or service compared to an identical unbranded version of the same product / service. In other words: Strong, relevant and unique associations that consumers have with the brand

Effect of branding on buyer decision process (Recap: lecture 3; Need recognition, Information search (“Where??”), Evaluation alternatives (“How am I in the eyes of my consumer??”), Purchase decision, Post purchase behaviour (“Is my consumer satisfied??”). With good branding and high brand equity; consumers skip step 2+3!!

Three branding options:

Private branding → 100% externalising

• Campina producing Albert Heijn’s milk

Co-branding/ingredient branding > Brand Alliance

• Intel and computer manufacturers

Manufacturer’s brand > 100% internalising

• Keeping it all just for yourself

So, you have a branded product and you keep your brand for yourself (manufacturer’s brand); you can then serve a single market or multiple markets.

Single market: single brand VS multiple brands

- Single Brand

• Full attention for maximum impact
• Based on assumption of market homogeneity

- Multiple Brands

• Market segmentation
• Mased on assumption of market heterogeneity

- Or family brands (Umbrella brand) > Unilever for example

Multiple markets: local brand VS global brand

- Local brands

• Assumption of market heterogeneity / local segments
• (Or result of acquisitions/mergers)
• allowing quality variations
• Local competitive position (‘local heroes’)
• Easier pronunciation by local consumers
• Avoiding negative connotation
• Avoiding legal complications
• Circumventing price control
• Discouraging gray marketing/ parallel import

- Global brands

• Based on assumption of market homogeneity
• Uniform brand image => no confusion
• Convenient identification
• Status and prestige
• Maximum market impact
• Lower production costs and/or
• Lower advertising costs, so economies of scale

International Product Strategies:

- Standardized Product

• Domestic product introduced internationally, with minor or no modification

- Localized Product

• Domestic product adapted for foreign markets
• Product designed specifically for foreign markets

- Global Product

• Product designed with international (not national) markets in mind
• Product having universal features
• Product being adaptation-ready, when necessary

Product modification may be necessary due to local use conditions (Netherlands: yoghurt is a dessert, USA: yoghurt is breakfast), local customs and culture (No porc for Islamics), etc.

Another important thing to keep in mind: Country of Origin effect = The effect on quality perceptions caused by knowledge of the production country location for the product

Lecture 6

“Chapter 15+16” > P of Price and Placement

Chapter 15

Price = The amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service > Price says something about the product

Pricing strategies:

1. Price level (strategic level)

Note: this is all about new products entering the market. Which price level should you as a firm maintain?

- Market-skimming = Setting a high price for a new product to skim maximum revenues layer by layer from segments willing to pay the high price

• See graph in slides; has to do with the market equilibrium > setting a price above equilibrium. In time price will drop to equilibrium

- Market-pricing

- Market-penetration = Setting a low price for a new product in order to attract a large number of buyers and a large market share.

2. Price changes over PLC

See graph in slides.

Take the refrigerator as an example. Once it was found, people started buying refrigerators and profits were huge. After a while, everyone has a refrigerator (market is at maturity) and as a refrigerator is a durable good (you buy one and assume you do not have to buy another in the next 5-10 years) the profits start declining fast.

> In order to save yourself as a company: add features to the product once the market is at maturity.

3. Pricing across products

Depends on your product line and assortment

4. Pricing across countries

Most critical thing to global marketing!! Think back to the Big Mac Index at lecture two and Global Marketing, Hollensen. It would be crazy to ask the same price for a Big Mac in a developing country as in a developed country.

Consider: Market conditions; Competitors; Cost factors; Government regulations

For example: Pharmaceuticals > once an American pharmaceutical firm entered the African market with a medicine against HIV. As they had huge R&D costs for developing the medicine, they asked a very high price. The African government intervened and made sure the price dropped, as the medicine was a necessity.
 

> See Global Marketing, Hollensen figure 15.6 for an international pricing framework!!

Other pricing issues; decisions:

- Operational decisions:

• Setting specific price:

• Cost-based pricing
• Value-based pricing → Chanel n.5 VS Davidoff  
• Competition-based pricing

• Other

• Psychological pricing
• Price discrimination / price differentiation
• Promotional pricing
• Currency in which price is stated

International issues:

- Transfer pricing (MNC’s!) = Pricing transactions between buyers and sellers that

belong to the same corporation

Companies use them to: Shift profits from high-tax to low-tax countries, Create and maintain barriers to entry, Manage levels of market involvement

- Price escalation = the added costs incurred as a result of exporting products from one country to another (shipping costs, trade barriers, taxes, etc.)

Approaches to Lessening Price Escalation

› Rationalizing distribution process

› Lowering export price from factory

› Establishing local production of product

› Pressurizing channel members to accept lower profit margins.

- Parallel Importing or Grey Market = “Trademarked products that are exported

from one country to another where they are sold by unauthorized persons or organizations”

> See image in the slide

• Causes

• Different price policies across countries
• Limited availability of product
• Inexpensive logistics for unauthorised channels

• Negative effects

• Erode brand equity
• Strain relationship with authorized channel members
• Lead to legal liabilities
• Complicate global marketing strategies

You can prevent it by control leaks and differences in products.

Chapter 16

Placement is of course about logistics.

‘Availability’; people want their products at the right place on the right time.

Advantages of using intermediaries

- Lower overhead for manufacturer

- Intermediary has local knowledge

- Intermediary has own network of customers

- Synergy: customer prefers one-stop shopping

- Intermediary provides additional services (market research, promotion material etc)

Channel decisions > See figure 16.1 at Global Marketing, Hollensen

Major channel / place decisions

- Structure of the channel decisions:

• Type intermediaries (retailer / wholesaler etc)
• Coverage (intensive / selective / exclusive)

• Intensive distribution for necessities (food has to be available everywhere, you do not want to go to 50 stores for your groceries)
• Selective distribution for shopping goods like clothes (shopping is most of the times a day-time activity and you want to look at several shops)  
• Exclusive distribution for specialty goods like a car (you drive a long time for

one particular good)

• Length (indirect / direct)
• Multichanneling?
• Control
• Degree of integration

Note: Cursive channel decisions should be known at exam!! Very important

- Managing and controlling channels

- Managing logistics

!! However, also: channel objective = availability (number of resellers, size of resellers, size of sales share with retailers)

Wrap up: Price and place strategies:

Building strong brands through products that are bundles of benefits, for which the

perceived price fits the perceived value. Building strong brands with international

coverage through channels that fit the product and the country

Notes on tutorial 6, as the tutorial case in week six is a practice exam and it is important you know how to answer the exam question correctly. You will get something similar at your final!

Tutoiral six- Wednesday 12 March 11.00-13.00

The Philips iron for men case is very important!! Exam will be similar.

Notes on Q1:

P of Product; don’t only come up with product features, but also services, branding, CoO-effect, et cetera

P of Promotion; you should also come up with what message you want to share: objective of promotion? Not only name the media via which you do your promotion but also name cognitive/affective/conative!!

P of Price; pricing strategy (skimming/penetration?) > relation of price to competitor’s price (PLC?) > base of price (cost/value/competition?)

P of Place; type of channels; length of channels; number of channels; Kind of distribution (intensive/selective/exclusive?) and type of retailers

Don’t mention countries and entry modes!!!!

Learn characteristics of each marketing mix instrument by heart, as you have to come up with several characteristics per marketing mix instrument.

Notes on Q2:
UAI = willingness of people to take risk.
High > Make sure you offer people guarantees, service, trials and explanations

Low > Make sure you put the emphasis on the newness of the product, so that people are eager to try it out

PDI = level of hierarchy in society.
General note > Be specific on which layer to focus. Focusing on the ‘lower layers’ in society won’t give you high sales

IND = individualism or collectivism?
General note > Emphasis on the benefits for either the individual or the group

MAS = importance of prestige

High > Put the emphasis on the status the product offers you

As you can see, Hofstede’s dimensions force you to adapt your marketing mix to each and every single country you enter!!   

Lecture Seven- Tuesday 18 March 11.00-13.00

“Chapter 17” > P of Promotion

Even the packaging of a product could be communication and promotion > Walking with say a cup of Douwe Egberts coffee is advertising for Douwe Egberts.

‘Break through the clutter’ ; getting your message across and getting a positive response from the audience

Communication takes place only when meaning is transferred and it is only effective if the meaning is understood in the way you meant it.

Communication process; figure 17.2 in Global Marketing

Context of home country (the sender sends a message to the foreign country) = coding ; Context of foreign country (the message from the sender is sent via a medium and is received by a receiver or the audience) = decoding.

> Due to cultural differences coding and decoding might differ in meaning. For example: using an owl in your logo might be interpreted as wisdom in western countries, which is meant by the firm; in other countries it might be interpreted completely different and as something negative. That would have a negative impact on your brand equity.

Also, noise might have a negative impact of the coding > decoding process. Noise might also be the extent of humour in an advertisement; Centraal Beheer Achmea had really funny advertisements on the television, ‘Even Apeldoorn bellen’, but due to the extremely high level of humour, people had no clue the campaign was about Centraal Beheer Achmea (insurance), they just saw how funny it was.

Developing effective communication (Figure 17.3 Global Marketing):

1. Objective setting

Communication objectives and sales objectives : Buyer-Readiness Stages

You want people to be aware of your product (Awareness); You want people to know your product (Knowledge); You want to people to have a positive attitude towards your product (Liking); You want people to prefer your product over other products (Preference); Convincing people should buy (Conviction); You want people to purchase your product (Purchase)

Cognitive objectives : Action > Awareness and Knowledge
Affective objectives : Feeling > Liking and Preference
Conative objectives : Behaviour  

2. Budget decisions

Percentage of sales/affordable approach; competitive parity approach; objective and task approach > Definitions see Global Marketing

3. Media decisions

Reach, frequency, impact, type (TV, radio, newspaper??)

3a: Designing an Affective Message:

- AIDA (Awareness, Interest, Desire, Action) framework guides message design (Objective = guide)

- Message content contains appeals or themes designed to produce desired results: Rational appeals, Emotional appeals (having dinner with the whole family is cosy and fun), Moral appeals

- Message structure : whether or not to draw a conclusion, one-sided versus two-sided arguments (only positive or both positive and negative arguments), order of argument presentation

- Message format : Design, layout, copy, colour, shape, movement, words, sounds, voice,

body language, dress, etc. NOTE: celebrity endorsement!!

3b: Choosing Media within instruments

- One-way communication Versus Two-way communication (Figure in Slides lecture 7)

The highest possible extent of one-way communication is advertising via newspaper, magazines, radio, TV. The highest possible extent of two-way communication is personal selling via sales presentations for example.

NOTE: P of Promotion is NOT just sales promotion

- Media decisions: Where and When? ; Reach, Momentum, Media Mix, Gross Rating Points, Frequency

- Effect of communication ; Graph in slides !!

4. Message decisions (creative strategy)

Standardization versus adaptation

- Drivers:

• Converging consumer wants and needs
• Net benefits to companies
  • Long term product identities
  • Economies of scale
  • Easier to control and manage brand
  • Gains retailers support

- Constraints

• Cultural diversity
  • Language
  • Perception

• Media limitations
  • Availability
  • Cost effectiveness

• Regulation
• Management and control

- Benefits of Standardization

• Cost savings
  • Economies of scale in production and marketing
  • Minimizes product/advertising development costs

•  Utilization and Transfer of Know-How
  • Experience transfer, idea transfer

•  Uniform image of quality and service
  • Global customers, international communication

• Easier co-ordination and control
  • Uniform standards

- Barriers to Standardization

• Differences in customer characteristics and behavior
  • Cultural values, perceptions
  • Government regulations and restrictions
  • Product/advertising, tariffs
  • Difference in Marketing Infrastructure
  • Media, macro distribution
  • Local Competition
  • Internal
  • Local management, existing network of operations

So shall you adapt you product or promotion? See framework offered in Global Marketing, Figure 11.3
You should ask yourself: Does the specific advertising message & media strategy need be changed because of environmental or cultural requirements?

From there you can take two positions: ‘One world, One voice approach’ or the Localized Approach

5. Evaluation > Measuring Effectiveness

Use coupons

See table in slides ; The impact of multiple-unit pricing on supermarket sales

Giving a discount and saying 1 for €X or say 4 for €X; 4 for €X increases sales more than 1 for €X

Wrap Up lecture 1-7 International Marketing; Semester 2.1

What to do in the marketing mix question at exam?

Use the total framework on slide 31 of lecture 7!!
!! Things you should always mention:

- Product: product quality/performance

• Functional attributes
• Design
• Brand name
• Package
• Label
• Country-of-Origin effect
• Services/guarantees

- Promotion: awareness, image, sales [new/existing customers]

• Objective (cognitive, affective, conative)
• Budget
• Instrument
• Design of message
• Media and motion
• Evaluation

Price: Price positioning

• Price level (skimming, market pricing or penetration)
• Specific price (cost, value or competition based)

Place: Availability

• Channel structure
  • Types of intermediaries
  • Coverage (intensive, selective, exclusive)
  • Length
  • Types of channels
  • Multichanneling
• Managing and controlling channels
• Logistics