C H A P T E R 1 3
Marketing strategy
Chapter objectives
2. Study the criteria that affect an MNEs decision to alter a good or service in order to adapt it
to local market tastes.
4. Review some of the major factors that influence international pricing and distribution
strategies.
Chapter summary
1. Marketing strategy begins with international market assessment, an evaluation of the goods
and services the multinational enterprise (MNE) can sell in the global marketplace. There
2. Product strategies will vary depending on the specific good and the customer. Some
3. There are a number of ways in which multinational enterprises (MNEs) promote their
products, although the final decision is often influenced by the nature of the product. The
two major approaches used in promotion are advertising and personal selling. Many
4. Pricing in international markets is influenced by a number of factors. Some of these include
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5. Place strategy involves consideration of distribution or the course that goods will take
between production and the final consumer. This course often differs on a country-by-
6. There are a variety of marketing strategies that are being used by MNEs when formulating
their strategic plans. Three of the most important strategies are ongoing market assessment,
effective pricing and Internet marketing with open innovation.
Chapter outline
Introduction
International market assessment
Initial screening: basic need and potential
Second screening: financial and economic conditions
Third screening: political and legal forces
Product strategies
Little or no modification
Moderate to high modification
Economics
Culture
Local laws
Product life cycle
Promotion
Nature of the product
Advertising
Personal selling
Pricing
Place
Different distribution systems
Choosing the best distribution system
Strategic management and marketing strategy
Internet marketing and open innovation
Lecture outline
A. Introduction
1. International marketing is the process of identifying the goods and services that
customers outside the home country want and then providing them at the right price and
place. In the international marketplace this process is similar to that carried out at home,
B. International market assessment
1. International marketing strategy starts with international market assessment, an
evaluation of the goods and services that the MNE can sell in the global marketplace.
2. Initial screening is the process of determining the basic need potential of the MNEs
goods and services in foreign markets. This screening answers the question: who might
be interested in buying our output? One way in which initial screening is carried out is
3. Secondary screening is used to reduce the list of market prospects by eliminating those
that fail to meet financial and economic considerations. Financial considerations include
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4. Market indicators are used for measuring the relative market strengths of various
geographic areas. These indicators focus on three important areas: market size, market
5. The third level of screening involves looking at political and legal forces. One of the
6. The fourth level typically involves the consideration of socio-cultural forces such as
7. The fifth level of screening is typically focused on competitive forces. In some cases
MNEs decide to enter a competitive market because they believe the potential benefits
8. Before making a final selection, MNEs usually enhance their information by visiting
C. Product strategies
1. Product strategies depend on the specific goods and customers. Some products can be
2. Industrial goods and technical services are good examples of products that need little or
3. There are many examples of how economic considerations affect the decision to modify
a product. As a very simple example, in the United States, packets of chewing gum
4. In some cases a product must be adapted to the different ways people are accustomed to
doing things. For example, the French prefer washing machines that load from the top,
5. Local laws can require the modification of products to meet environmental and safety
requirements. For example, US emission-control laws have required Japanese and
Rugman and Collinson, International Business, 6th edition, Instructor’s Manual
European car importers to make significant model changes before their vehicles can be
sold in the United States.
6. Another reason for modifying a product is to cope with the limited product life cycle of
the good. Ford Motor, for example, was extremely profitable in Europe during the
D. Promotion
1. Promotion is the process of stimulating demand for a companys goods and services. In
2. Advertising is a nonpersonal form of promotion in which a firm attempts to persuade
consumers to a particular point of view. In many cases, MNEs use the same advertising
3. The MNEs use a number of media to carry their advertising messages. The three most
popular are television, radio and newspapers. In particular, the use of television
advertising has been increasing in Europe, while in other regions, such as South
4. Personal selling is a direct form of promotion used to persuade customers to a particular
5. Because many international markets are so large, some MNEs have also turned to
E. Pricing
1. Every nation has government regulations that influence pricing practices. In some
2. Consumer tastes and demands vary widely in the international marketplace, resulting in
MNEs having to price some of their products differently. For example, companies have
3. When selling products overseas, MNEs often end up assuming the risks associated with
currency fluctuations. This risk is particularly important when multinationals have a
F. Place
1. Distribution is the course that goods take between production and the final consumer.
2. It is often difficult to standardize the distribution system and use the same approach in
3. There are a number of criteria that MNEs use in creating the most efficient distribution
system. One is to get the best possible distributors to carry their products. Depending on
G. Strategic management and marketing strategy
1. Marketing strategies play a key role in helping MNEs to formulate an overall plan of
2. One of the major areas MNEs are continuing to pay attention to is data collection and
3. Some MNEs use high pricing with high quality to skim the cream off the top of the
4. The Internet has become an essential part of any firms marketing and market analysis
Answers to review and discussion questions
1. How does initial screening help an MNE evaluate those goods and services that might
be sold in the international market? What are some ways in which this screening is
carried out?
An initial survey is used to determine the basic need potential of the companys goods and
services in foreign markets. This survey helps answer the question: who might be interested in
this good or service? One way in which this is done is by examining the current import policies
Rugman and Collinson, International Business, 6th edition, Instructor’s Manual
2. After an MNE has completed an initial screening of its goods and services, what other
steps can it take in further refining the choice of those products to sell internationally?
Briefly describe the remainder of the process.
After the initial screening, an MNE will evaluate the financial and economic aspects of goods or
services it is thinking about offering. These include such aspects as return on investment, market
3. Why can some goods and services be sold internationally without having to undergo
much, if any, modification? Explain.
4. What factors influence the need for moderate to high modification of goods and
services that have sold well in the home country and will now be marketed overseas?
Identify and describe three of the most influential factors.
One of the factors that influence the need for moderate to high modification is economics, as
5. When should an MNE use the same promotion strategy overseas that it uses at home?
When should it modify the approach?
An MNE will use the same promotion strategy overseas that it uses at home when there is no
need to modify either the product or the message. However, in most cases either or both of these
6. Many MNEs find that their advertising messages can be used in overseas markets
without much, if any, modification. Why is this so?
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7. Why do MNEs sometimes have to modify their personal selling strategies when
marketing their goods in international markets?
8. What kinds of factors influence the pricing of goods and services in the international
marketplace? Identify and describe three.
9. Why do many MNEs find that they cannot use the same distribution strategy overseas
that they have used at home?
10. In choosing the best distribution system, what types of criteria do MNEs use? Identify
11. In what ways are multinationals using the following concepts to help them gain greater
international market share: ongoing market assessment, effective pricing, Internet
marketing and open innovation? In each case, offer an example.
Ongoing market assessment is used through the collection and analysis of data for the purpose
of developing and updating market knowledge. For example, Clarins SA continues to gather
information on its customers in order to know the changes to make in its product lines. Effective
12. Explain how open innovation networks using the Internet can help firms decide on
whether to customize or standardize product features.
Open innovation is the term used to describe interactive, collaborative networks of product or
service providers and customers. They allow users of products and services to help shape their
Answers to real cases
Bang & Olufsen
1. Why does Audi use B&O equipment in its high-end cars?
2. How does B&O combine actions on product, place, promotion and price?
Bang & Olufsen execute strategies for product, place, promotion and price in a way that allows
for a common message of premium quality and prestige. Considerable time and energy is put
into the development process, where products must live up to high standards for quality and
to the segment and adding to its exclusivity.
3. How can B&O double its market share by expanding on its successful niche in the
future?
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Brazilian soap operas: a world market
1. How is language an issue when marketing Brazilian entertainment to other countries?
2. What competitive advantages does Brazil have in the development of a film industry?
What types of barriers does this industry face in international markets?
Brazil has a number of competitive advantages for the development of a film industry. One such
advantage is a large population that is receptive to the industrys product offerings. Brazilians
3. In what way can foreign capital prove to be a key strategy for TV Globo and the Globo
Group?