Unit 3: International Marketing Departments
Marketing is a complex discipline under the best of circumstances. Companies need to effectively communicate the benefits their products provide to consumers; they must select the appropriate segment of the population to target; they must apply appropriate pricing strategies; get the product to the customers where they shop; and continually conduct market research to respond to market changes and fluctuations. Now, consider the challenges of implementing a marketing strategy in global markets where conditions are not only different from the US but different from other nations, as well. In this unit, we will explore the elements global marketers must address and how they can effectively implement a strategy that can lead to success.
Completing this unit should take you approximately 6 hours.
Upon successful completion of this unit, you will be able to:
- explain the key functions of international marketing departments, such as market research, product management, price setting, distribution, marketing communications, and matching products to customers;
- develop an international marketing plan for a product being sold into a new country market;
- analyze how the 4Ps and 4Cs of marketing change depending on the context of buyer and country;
- distinguish between the customer value chain and customer value proposition canvas and how marketers can use them successfully to target customers in international markets; and
- discuss how the customer value chain and customer value proposition canvas change depending on the context of the buyer and country.
3.1: The Functions of International Marketing Departments
One of the first steps in ensuring that marketing strategies are effective and appropriate is developing a comprehensive marketing plan. This is a complex document that becomes even more involved when addressing international markets. For example, market conditions vary from country to country. Distribution channels may be limited or not in place at all. The competitive environment is not the same in different nations, and consumers in those markets make decisions based on many different factors. Pricing structures need to be adapted to local preferences, and product needs may also be different. Read this section for details on how to write an international marketing plan. This will help you understand the complexities involved in marketing on an international scale.
This reading explores each element of the marketing plan in detail and explains how the plan is a guideline for marketing activities in any marketplace. As you read each step, consider the additional complexities that arise when applying these factors to a global market. Take the time to practice by choosing a marketplace and a product, and think about how you might create a marketing plan for that location.
Market research sets the foundation for forming appropriate and effective marketing strategies. The research process for exploring international markets is similar to within the US since the same steps apply. However, researching international markets requires additional exploration into the country of interest's unique nature. These factors can include local rules and regulations, competition, trends, import and export data, and other forces that affect market conditions. As you read, think about market research you might have been involved in and how much more complex it would have needed to be if it was for an international marketplace.
Developing an appropriate pricing strategy requires a company to consider the results of each of its decisions for the company, the marketplace, and the customers they are targeting. For example, if the strategy's goal is to attract customers based on features and benefits, then a company may choose to take a non-competitive approach. However, if customers use price as a decision-making factor, then the company will want to use a competitive pricing strategy. We must also consider the pros and cons of pricing above or below a competitor and how to price a new entry into the marketplace. New entry pricing generally relates to the demand for the item. For example, when Amazon first introduced the Kindle, its price was extremely high. It was unclear how well this new technology would be adopted, and the high price led to low sales levels. As the popularity of the Kindle grew, the price was reduced considerably, and sales increased dramatically. When applying pricing strategies to international markets, there are even more factors to consider, which we will explore later. Read this chapter for an in-depth look at global pricing strategies and the factors that can impact business decisions including currency fluctuations, governmental controls, inflation, as well as competitive forces.
For many years, product management was done on a centralized level across nations, with close collaboration across disciplines. Today's model incorporates some of these past practices but also integrates a more regional approach to generate greater efficiencies, facilitate flexibility, and utilize local expertise. Companies must evaluate the pros and cons of standardized products vs. products that have been customized to address local tastes and preferences. For example, Coca-Cola and Pepsi use the same products and ingredients in all markets. However, McDonald's varies their menus to meet cultural variations and local tastes. Read this summary and the sections for more insight into strategies taken by different organizations in global markets.
No company can satisfy their customers without getting products and services to consumers when they need them, when they want them, and where they can buy them. Known as the supply chain, activities include planning for merchandise production, purchasing and managing materials, distribution of materials, providing customer service, and many others. Effective supply chains are able to quickly respond to changing conditions, they can adapt easily as environmental issues change, and they work to ensure that all parties in the chain are aligned for optimal performance. To gain a more in-depth perspective, read this chapter and consider the many steps taken to ensure that the products you buy are available to you as a consumer and business person.
Creating an effective marketing campaign takes a great deal of time and effort. Organizational goals must be determined, advertising approaches need to be considered, and the target market must be clearly identified. Once these factors are established, advertising agencies begin creating an ad they feel will be memorable and best communicate what that product has to offer. While many ad campaigns are effective and hit this mark well, we all know that there have been many advertising disasters, too. When creating a communications strategy for global markets, each country's culture, language, habits, and behaviors must be carefully considered. Does a slogan translate correctly? Is the photo on the product suitable for that nation? Are colors used appropriately? Are religious beliefs respected? Read this summary and the sections for a closer look at the challenges of creating effective advertising messaging on the international stage.
No company can meet the needs of all consumers. This is true for products in the US and even more so in international markets. Therefore, choosing the appropriate target market takes on significant importance when expanding to other countries. Deciding which countries to enter and when is essential to success. Beyond demographics, companies must consider the formation of customer relationships, the nature of the communication mix, distribution channels, and the presence of other global and local brands. Read this section for a more detailed look at this part of the marketing strategy.
3.2: The 4 Ps and 4 Cs of International Marketing
The 4Ps (also known as the marketing mix) represent the most basic of marketing concepts. The individual elements – Product, Price, Place, and Promotion – must all work together to ensure success in a global market. But, when the differences between the home country and the international market are greater, creating an effective marketing mix becomes more difficult. While some companies like Coca-Cola and Visa take a global approach to branding, they must still consider the impact of language, color, values, and norms when appealing to consumers in international markets. Read this chapter for more insight into creating an integrated marketing communications strategy.
As the marketing function has taken on a more consumer-centric approach, new elements have been added to it in the form of the 4Cs. These include customer solutions, communication, convenience, and cost. The integration of these concepts fits well with the 4Ps and enables marketers to better formulate strategies for services that provide solutions for customers. Besides providing more insight into the 4Ps, this section explores the 4Cs and how their categories work together to formulate effective strategies.
3.3: The Customer Value Chain and Customer Value Proposition Canvas
The value chain encompasses the internal factors that affect a product's cost, from its inception to the hands of the end-user (the consumer). While these functions are not evident to the consumer, they all affect the ultimate selling price. For example, research and development ensure that the right products are being explored. Product or service design ensures functionality and sales/marketing communicates what the product has to offer. When a value chain has been properly identified, a company can then use it to target its customers effectively on a global scale. Read this article for a more in-depth analysis that explores how the steps in the chain work together.
The value chain encompasses the internal factors that affect a product's cost, from its inception to the hands of the end-user (the consumer). While these functions are not evident to the consumer, they all affect the ultimate selling price. For example, research and development ensure that the right products are being explored. Product or service design ensures functionality and sales/marketing communicates what the product has to offer. When a value chain has been properly identified, a company can then use it to target its customers effectively on a global scale. Read this information article for a more in-depth analysis that explores how the steps in the chain work together.
Unlike the value chain, which is an internal function that focuses on operations, the value proposition is the external messaging that communicates what the product has to offer to the customer. Customers are always interested in the benefits a product or service will provide for them. They will be asking, "what's in it for me?". The answer to this question gives the consumer a reason to buy one product over another. When a company understands what is important to their customer, no matter where they are in the world, it can better formulate messaging that will be meaningful. An effective value proposition will be clear and concise, persuasive, and will differentiate the product from the competition. Consider the value propositions from Target – "Expect More, Pay Less" – and Walmart – "Save Money, Live Better". While they convey similar messages, the differences are evident but no less meaningful and effective. This section will explore the intricacies of the value proposition and how companies can formulate effective messages for their international marketplaces.
Now that we have identified the elements in the value chain and understand the formulation of the value proposition, we can look at the role the customer plays in marketing strategy development and how they define value. Because this changes all the time, companies must also revise, update, and adapt their strategies to ensure that customers receive the value they actually want and not just what the company believes they want. For example, consumers may value a particular product but may change their choices based on new entries into a marketplace. New social and cultural factors may influence customer decisions, which can also change how they view a particular product. Consumer needs may also change due to economic, political, and other outside influences. Read this chapter to see how consumers can affect value messaging.
Unit 3 Assessment
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