Notes de cours

International Marketing
Class #4 - Cultural environment of international marketing
Culture : collective programming of the mind which distinguishes the members of one human group from another (Hofstede, 1980). Is the learned, shared, interrelated ways in which a society understands, decides and communicates.
Elements of culture (determine the way we behave)
Language: verbal & non-verbal
Tradition, manners and customs
Social interactions and institutions
Values, attitudes and symbols
Art, tastes
Religion
Education
Technology and material culture (ex: economic, accumulated by generation)

Visible and invisible parts of culture (Figure 7.1)
Visible daily behaviour
Body language, clothing, lifestyle, drinking and eating habits
Values and social morals
Family values, se roles, friendship patterns
Basic cultural assumptions
National identity, ethnic culture, religion

Different levels of culture
National culture
Business/Industry culture
Company culture
Individual behaviour/decision maker

Hall’s communication context (see Table 7.1)
Languages (spoken, silent) are important means of cross-cultural communication. Cultures differ with regard to amount of context in the communication process.
Low-context cultures (often also individualistic, egalitarian)
Cultures rely on spoken and written languages for meaning (ex: Western Europe, US)
High-context cultures (often also collectivistic, hierarchical)
Cultures use and interpret more of the element surrounding the message (people, situation, etc.) (ex: Japan, China, Saudi Arabia)

Role of language in global marketing
Language is important in information-gathering and evaluation efforts
Language provides access to local society
….
Cultural criteria according to Hofsede
Power distance
Individualism – Collectivism
…
Uncertainty avoidance
Time perspective

Self-reference criterion ( SRC)
One’s unconscious reference to one’s own cultural values when attempting to understand another culture

Approaches to eliminate SRC
Define the problem or goal in terms of home country culture, traits, habits and norms
Define the problem or goal in terms of the foreign culture, traits, habits and norms
Isolate the SRC influence in the problem and examine it carefully to see how it complicates the problem
Redefine the problem without the SRC influence and solve for the foreign market situation
SRC examples: what to give as a business gifts (huge difference between China and Germany, Saudi Arabia and Russia), food presentation different in many countries,

Class #5 International Market selection process
IMS Approaches
Pragmatic (opportunistic, reactive)
Low resources involved, for sub-suppliers: sometimes markets chosen by larger firms BUT may overlook attractive markets
Systematic (proactive, analytical)
Selection based on relevant criteria, market segments are developed and screened NOT applicable when: lack of resources, sub-suppliers position

Market segments
Global market segments (similar customer segments in all/many countries): opportunity of marketing standardization
National market segments: differentiated marketing

Market segmentation (voir figure 8.1)
Macro-segmentation: countries/ group of countries
Micro-segmentation: within the countries selected in macro-segmentation
Subsegments
Determinants of firm choices (voir figure 8.1 et 8.2)
The firm
The environment

Criteria for effective segmentation (voir figure 8.3)
Measurability
Accessibility (can be reached and served effectively)
Substantiality/profitability
Actionability

Screening process

BERI: Business Environment Risk Index
Useful tool for preliminary, coarse-grained, macro-oriented screening of international markets
Criterias (pas tous les connaître!): political stability, economic growth, labour cost, currency convertibility, bureaucratic delays, etc.)

Market attractiveness/competitive strength matrix (voir figure 8.4, table 8.2)
A, B, C countries, scale 1 to 5

Micro-market segmentation

IMS process of Konica Minolta in Europe (voir figure 8.2 pas sûr)
Regional macro screening
Preliminary market screening
Specific country screening
Specific market screening
City market screening

Market expansion strategies
Waterfall approach (figure 8.11) : xxx
Shower approach (figure 8.12): xxx

Class #6 Not in class

Class #7 - Intermediate entry modes: contract manufacturing, licensing, franchising, joint ventures,/strategic alliances
Contract manufacturing (ex: Ikea)
Manufacturing which is outsources to an external (foreign) partner, one that specializes in production

Factors encouraging foreign market production
Desirability of being close to foreign customers
Foreign production costs are low
Transportation costs may render heavy products non-competitive
Tariffs can prevent entry of an exporter’s products
Government preference for national suppliers

Licensing
Gives a right to the licensee against payment, e.g. a right to manufacture a certain product based on a patent, In exchange for some agreed royalty

Rights that be offered in a licensing agreement
Patent covering a product or process
Manufacturing know-how not subject to a patent
Technical advice and assistance
Marketing advice and assistance
Use of a trademark/trade name

Motives for licensing out
The licensor firm will remain technologically superior in its product development
The licensor is too small to have financial, managerial or marketing expertise for overseas investment (own subsidiaries)
The product is at end of product life cycle in the advanced countries but stretching product life cycle is possible in less developed countries
Opportunity for profit on key components (produced by the licensor)
Government regulations may restrict foreign direct investment or, if political risks are high, licensing may be the unrealistic entry mode

Franchising (eg: McDonald’s)
Exchange of rights between a franchisor and franchisee, such as the right to use a total business concept including use of trade marks (brands), against some fee

Types of franchising
Product and trade name franchising (e.g. distribution system of Coca Cola bottlers)
Business format ‘’package’’ franchising including e.g.: …

Interdependance between franchisor-franchisee
Franchisor-franchisee
Franchisee-franchisor
-Economy of scale
-Local knowledge and entrepreneurial talents
-Fast growth
-Capital infusion (purchase fee)
-Income steam (yearly fee)
-Local community goodwill
-Suggestions for innovation
-Motivation to operate a successful business
-Trade mark strength
-Technical advice
-Support services
-Marketing resources
-Advertising
-Instant customer recognition

Key success factors in the franchisor-franchisee relationship
Integrity of business system: standardization
Capacity for renewal of business system (franchisees’ input)

Differences between licensing and franchising (voir table 11.2)

Joint venture
An equity partnership between two or more partners

Reasons for using joint ventures
Firms with partners in host countries can increase speed of market entry
Costs of global operations in R&D and production can be shared
Complementary technology or management skills can lead to new opportunities
Less developed countries may restrict foreign ownership
Sources of potential conflict
Diverging goals
Double management
Repatriation of prodits
Mixing different cultures
…
Equity/non equity alliance (voir figure 11.5)
Figure 11.6
Figure 11.9 = Mcdo + Coca-Cola + Disney = powerful alliance
Hello Kitty = more licensing rather than franchising