Lecture 1
INTRODUCTION
TO
INTERNATIONAL MARKETING
Welcome to International Marketing
Iain McDonald
(iain.mcdonald@uts.edu.au)
Course Outline:- structure of course
- allocation of marks
- lectures
- tutorials
What is International Marketing?
International marketing is the process of
planning and undertaking transactions
across national boundaries that involve
exchange
- e.g. Education, Food, Medicine, Cars, Oil,
Clothes, Money, Tourism .
Why Is International Marketing Important ?
The opportunity that it gives to:(1) Countries:
(a) economic advantage
- what is China really good at ?
- what is Oz really good at ?
- opportunity for trade ?
(b) economic multiplier
- local communities China / Oz
- new jobs
- income impacts
Why Is International Marketing Important ?
The opportunity that it gives to:(2) Firms additional growth from new markets,
additional profits .
- Microsoft
- McDonalds
- Apple
- Coca Cola
Why Is International Marketing Important ?
The opportunity that it gives to:(3) People
- opportunity
- new jobs, growth existing jobs
- income,
- security,
- lifestyle
e.g. Chinas economic development last 20yrs
Why Is International Marketing Important ?
The opportunity that it gives to:(4) Trade Relations:
- via formal / informal contacts
- government to government trade agreements
(makes rules for trading easier / cheaper)
- business to business contracts
e.g. Oz free trade agreements with Japan, China, Korea .
Why Is International Marketing Important ?
The opportunity that it gives for:(5) Cultural exchange:
- better understanding of who we / you are .
- closer political, commercial, personal relationships
- tourism, sport, education exchanges
- all above help security ...
e.g. worlds new engagement with Myanmar but not with
North Korea
How Does International Marketing Work ?
1.Firms (and sometimes Governments) identify through
market research a need .
2. Can it be made to work ?
3. Will it be profitable ?
4. Negotiate to make it happen
5. Manage, monitor and ADAPT the plan
e.g. - McDonalds in Japan, Germany
- Google in France, China
So How Does International Marketing Work ?
1. Firms research similar / adapted customer needs
(medicine, education, food, clothing, cars)
2. In countries where it is safe to do business Australia / Syria
3. They then research the best way to set up their business
(on their own or (say) via a franchise, distributor, others ???)
4. They evaluate the expertise / experience they will need got it ?
5. Then they execute the plan and adapt it for changing circumstances
(Nikes contract manufacturing and child labor issues)
Who Benefits from International Marketing ?
Almost everyone .
(1) Firms:Zara (Spain) / H&M (Sweden) set up in Oz = jobs here
(Clothing designed / made / transport = jobs wherever)
BHP (Oz) exports iron ore to China = jobs there
(Steel made = products made in China and exported = jobs wherever)
McDonalds (anywhere) = local jobs + supplier contracts
Who Benefits from International Marketing ?
(2) Countries:Vietnam economic development over the last 20years
Myanmar from political isolation to gradual opening of economy
and Asias new source of cheap labor
Zambia a new foreign capital hub in Africa, economy is booming
North Korea chose isolation 50 yrs ago and still is one of the most
backward and poorest countries in the world
Who Benefits from International Marketing ?
(3) Individuals and Families:China / India number of millionaires, rising middle class, many
firms now re-locating OUT OF CHINA as wages rise. Rise of budget
airlines.
Poland, Latvia, Lithuania, Estonia since joining the EU
economies have more than x2 in size
Botswana, Angola stable government with specific economic
planning has seen average incomes x4 last 10yrs
How Big Is International Marketing ?
There are 193 members of the United Nations
There are 3 other states that are not members ???
So there are 196 trading states in total
World Trade 2013 ($tn)
Merchandise Trade
18.2
(the most commonly used term)
Others
Commercial Services
Transport
Travel
Others
4.2
0.9
1.1
2.2
26.6
Who Are The Big Guys in IM?
Merchandise Trade 2013 ($tn)
Exports
1.China
1899
2.USA
1481
3.Germany
1474
4.Japan
823
5.Holland
660
6.France
597
7.Korea
555
8.Italy
523
9.Russia
522
10.Belgium
476
(21. Australia
271)
Imports
1.USA
2.China
3.Germany
4.Japan
5.France
6.UK
7.Holland
8.Italy
9.Korea
10.Canada
(19.Australia
2265
1743
1254
854
715
636
597
557
524
452
244)
What About By Region?
Merchandise Trade (Exports) 2013 ($bn)
North America
South America
Europe
Russia / CIS
Africa
Middle East
Asia
($bn)
2,483
749
6,601
522
597
1,228
5,534
(% Total) (Yr /Yr % change)
14
16
4
27
37
17
3
34
3
17
8
37
31
18
What Challenges for International Firms ?
(The Market Schematic Model)
External
Environment
Political
Legal
Economic
Social
Technical
Cultural
Possible Customers
Target Customers
Who to Buy From ?
Marketing Process
Who to sell to ?
With what ?
Where ?
When ?
How ?
The Market Place
Their Offers Vs Yours
Competitors
You
Outcomes
Profitable Growth
Quality Customers
Repeat Business
What Challenges for International Firms ?
(The Market Schematic Model)
External
Environment
Political
Legal
Economic
Social
Cultural
Technical
What are the external environment challenges
in each of these areas ?
What will they mean for the firms
business model ?
What changes may need to be made ?
e.g. doing business in USA, Vietnam?
What Challenges for International Firms ?
(The Market Schematic Model)
Possible Customers
Target Customers
Can we segment the international market(s) in the same way ?
Are the target customers the same ?
e.g. - customers for cars in France and Somalia ?
- types of cars for France and Somalia ?
- types and quantities of food for customers in France and Somalia?
- use of bottled water in France and Somalia ?
What Challenges for International Firms ?
(The Market Schematic Model)
The Market Place
Is the market place the same ?
If there are differences what might this mean for our
business operations ?
e.g. - the market place for clothes in Japan and India ?
- building houses in Russia and Uganda ?
What Challenges for International Firms ?
(The Market Schematic Model)
The Market Place
Their Offers Vs Yours
Competitors
You
Are the competitors the same ?
What do their different operations mean for your competitive advantage ?
e.g. - are your competitors in China the same as in Germany?
- do they operate in the same way ?
What Challenges for International Firms ?
(The Market Schematic Model)
Marketing Process
Who to sell to ?
With what ?
Where ?
When ?
How ?
What do all these changes mean
for your marketing plans ?
- getting information
- evaluating it
- making decisions
Outcomes
Profitable Growth
Quality Customers
Repeat Business
Is International Business Easy To do ?
Countries . ???
Companies .. ???
International Firms Specific Challenges
Coca Cola the most known brand on the planet but new profitable growth ?
McDonalds - the almost perfect international firm why ?
Nokia we were the biggest and best, but now ?
Emirates - deep pockets help and Government backing
Nike - the challenges of sweat shop labour
BHP - what does $40bn buy you in Canada nothing !
Kodak they just didnt get digital and re now bust
International Firms Specific Challenges
Wal Mart expand into Africa great opportunity ? - but not if the local
Governments dont want you
Huawei the biggest white goods company in the world and now want to
expand into US but too close to the Chinese military, so .. ?
Shell the worlds largest LNG project in 2001, taken away by the Russian
Government
Apple what next .. cars ????
Case Study - Ethakota (India)
10 hrs train from Hyderabad, then 2 hrs car
Village hall has 47 people . and PCs
PCs connect via radio link to internet
Used to book car servicing / check expense a/cs / arrange job
interviews for applicants all remotely
Set up by gramIT an NGO
(70% Indian pop in villages)
Income is now 4 times higher than from farming
They get to stay in village, social cohesion
And, brought some villagers back from other jobs outside village
Case Study Abalone Farm
Northern Tasmania
- 660 concrete tanks
- 3m abalone
- Produce 40 tonnes p.a.
(50% export (Japan)
New logistics technology:- Vacuum pack in shell, in brine
(Freeze at (-) 18C)
- Special airfreight packaging / overnight
to Tokyo
Target:
Restaurant market in Japan (very high prices)
and International Marketing
can create some surprising marketing circumstances
Georgia Chopsticks (USA) now exports 44 million sets / day to China.
(marked Made in USA)
Shortage of the right kind of wood (sweet gum) in China, but theres an
abundance of it in Georgia.
The factory opened in 2007 in a
recession hit town with 12% unemployment.
Now employs 200 people and
works 3 shifts / day, 7 days
and International Marketing
can create some surprising marketing circumstances
Vancouver (Canada) has banned the use of doorknobs
in all buildings
because of the ageing population,
who find it much easier to use
door handles
and International Marketing
can create some surprising marketing circumstances
After the Costa Concordia ran aground on the Italian island of Giglio,
tourists were replaced by salvage workers in hard hats, life vests and dirty
overalls. Hundreds of workers had to be catered for in the hotels, cafes
and restaurants.
The influence of all these foreign workers has internationalised the locals,
changing what they eat and drink. Restaurants have added foreign dishes
and special beers and liquors just for them.
Important Learning and Revision Points
1. Why IM is important what are the key factors for firms to
consider ?
2. What does a typical IM project evaluation involve / how
does it work ?
3. Components (drawing) of the market schematic model ?
4. Examples of the benefits of IM for countries, firms, people ?
Tutorial Next Week
Case Study 1 P&G in Vietnam
