International Marketing Exam 3

Legal Constraints

-Advertising campaigns must comply with legal regulations around the world -Comparative advertising is heavily regulated in other parts of the world -A variety of restrictions on advertising of pharmaceuticals is restricted in many countries -Advertising on television is strictly controlled in many countries, e.g., in Germany, for example, commercials must be spaced at least 20 minutes apart and total ad time may not exceed 12 minutes per hour.

Linguistic Limitations

-Advertising from culture does not often translate well in another culture due to differences in languages and dialects -Even pronunciation causes problems

Designing Compensation Systems: For a Global Salesforce

-Among multinational companies about half describe their sales compensation plans as global in nature and the other half as local -Compensation plans of American companies vary substantially around the globe, reflecting the economic, legal, and cultural differences

Media Planning & Analysis - Tactical Considerations

-Availability -Cost -Coverage -Lack of Market Data -Newspapers -Magazines -Radio and Television -Satellite and Cable TV -Direct Mail -The Internet -Social Media -Mobile Phone Applications -Other Media

Relationship Marketing and Industrial Products

-Building long-term relationships with customers is a viable strategy for business-to-business marketing -It shifts the focus away from price to service and long-term -Relationship marketing is even more critical in B2B marketing than in B2C marketing. -The reward is loyal customers that translate into substantial long-term profits -Focusing on long-term relationship building will be especially important in most international markets where culture dictates stronger ties between people and companies

International Control of Advertising: Broader Issues

-Consumer criticisms of advertising are not a phenomenon of the U.S. market only. -Consumer concern with the standards and believability of advertising may have spread around the world more swiftly than have many marketing techniques. -European Commission officials are establishing directives to provide controls on advertising as cable and satellite broadcasting expands. -International advertising associations are striving to forestall laws by imposing self-regulation, but it may be too late; some countries are passing laws that will define acceptable standards.

International Advertising

-Decisions involving advertising are those most often affected by cultural differences among country markets -Consumers respond in terms of their culture, its style, feelings, value systems, attitudes, beliefs, and perceptions -Advertising's function is to interpret the qualities of products in terms of consumer needs, wants, desires, and aspirations, the emotional appeals, symbols, and persuasive approaches -Reconciling an international advertising campaign with the cultural uniqueness of markets is the challenge confronting the international or global marketer Seven step are involved: 1. Perform marketing research 2. Specify the goals of the communication 3. Develop the most effective message(s) for the market segments selected 4. Select effective media 5. Compose and secure a budget based on what is required to meet goals 6. Execute the campaign 7. Evaluate the campaign relative to the goals specified

The Message: Creative Challenges

-Global Advertising and the Communications Process -Legal Constraints -Linguistic Limitations -Cultural Diversity -Media Limitations -Production and Cost -Limitations

Motivating Sales Personnel

-Motivation is complicated because the firm is dealing with different cultures, sources, and philosophies -National differences must always be considered in motivating the marketing force -A manager must be extremely sensitive to the personal behavior patterns of employees due to cultural differences -Individual incentives that work effectively in the United States can fail completely in other cultures.

Global Perspective - Integrated Marketing Communications (IMC)

-Once a market offering is developed to meet target market needs, intended customers must be informed of the offering IMC comprises: advertising sales promotions personal selling direct selling, and public relations All these mutually reinforcing elements of the promotional mix have as their common objective the successful sale of a product or service Although for most companies in international markets, advertising and personal selling are major parts of their selling effort. The goal of most companies, large and small, is to achieve the synergies possible when sales promotions, public relations efforts, and advertising are used in concert.

Media & Planning Analysis: Tactical Considerations & Specific Media Info

-The changes in media in the 21st century are proceeding at a blinding speed -A revolution in communications is under way even in the last couple of years -Political events and natural disasters can dramatically impact many millions of people overnight, but the network effects of the burgeoning electronic communication media—in the form of PCs, the Internet, and mobile phones

Campaign Execution and Advertising Agencies

-The development of advertising campaigns and their execution are managed by advertising agencies -Just as manufacturing firms have become international, so too have U.S., Japanese, and European advertising agencies expanded internationally to provide assistance worldwide. -The international marketer has a variety of alternatives available. -In most commercially significant countries, an advertiser has the opportunity to employ a local domestic agency, its company-owned agency, or one of the multinational advertising agencies with local branches.

Regional Segmentation

-The emergence of pan-European communications media is causing many companies towards more standardized promotional efforts -To avoid the confusion when a market is exposed to multiple brand names and advertising messages, as well as for reasons of efficiency, companies strive for harmony in brand names, advertising, and promotions across Europe -Along with changes in behavior patterns, legal restrictions are slowly being eliminated, and viable market segments across country markets are emerging

Advertising Strategy and Goals

-The goals of advertising around the world vary substantially -Intense competition in world markets and savvy foreign consumers have created a need for more sophisticated advertising strategies. -Increased costs, problems of coordinating advertising programs in multiple countries, and a desire for a broader company or product image have caused multinational companies (MNCs) to seek greater control and efficiency without sacrificing local responsiveness. -More multinational companies are balancing between standardization and customization of advertising themes internationally.

Trade Show important aspect of B2B

-Trade shows serve as the most important vehicles for selling products, reaching prospective customers, contacting and evaluating potential agents and distributors, and marketing in most countries -Trade shows serve a much more important role in other countries where most prospects are found -European trade shows attract high-level decision makers who are there to buy products -Trade shows provide the facilities for a manufacturer to exhibit and demonstrate products to potential users and to view competitors' products -Trade shows create an opportunity to create sales and establish relationships with agents, distributors, franchisees, and suppliers that can lead to more-permanent distribution channels in foreign markets

Expatriates

-With the increasing volume of world trade, the number of companies relying on expatriate personnel is increasing as well -When products are highly technical, or when selling requires an extensive background of information and applications, an expatriate sales force is the best choice The chief disadvantages of an expatriate sales force are: -the high cost -cultural and legal barriers and -the limited number of high-caliber personnel willing to live abroad for extended periods -Companies with well-planned career development programs have the least difficulty -Careful fitting and integration of expatriate employees into foreign offices also can make a big difference

Other Business services

-after sales service or other types of services are major sources of revenue. Trade creates demands for international services. Most business services companies enter international markets to service their local clients abroad. -Once established, many of these client followers , one researcher refers to them, expand their client base to include local companies as well. -As global markets grow, creating greater demand for business services, service companies become international market seekers.

Business Services - After Sales Services

-becoming important for many industrial products -Customer training is a major after sale service for technical products in countries that demand the latest technology but do not always have trained personnel -Crucial for building strong customer loyalty and are always more profitable than the actual sale of the machinery or product

Attributes of product quality

-the level of technology reflected in the product -compliance with standards that reflect customers needs -support services and follow-through -the price relative to competitive products perceptions of industrial product quality can vary

Training for International Marketing

-the nature of the program depends largely on both the home culture of the salesperson and the culture of the business system in the foreign market-also whether expatriate or local will be representing them -Also important is whether expatriate or local personnel will be representing the firm -Training for expatriates focuses on the customs and the special foreign sales problems that will be encountered -For local personnel require greater emphasis on the company, its products, technical information, and selling methods -For either, the sales training activity is burdened with problems stemming from long-established behavior and attitudes -Before any training can be effective, open-minded attitudes must be established

Implications for Managers and Negotiators

1) Location 2) Physical Arrangements 3) Number of parties 4) Number of participants 5)Audiences 6)Communication channels 7) Time limits Four steps lead to more efficient and effective international business negotiations: -selection of the appropriate negotiation team -management of preliminaries including training, preparations, and manipulation of negotiation settings -management of the process of negotiations, that is, what happens at the negotiation table and -appropriate follow-up procedures and practices We recommend the following checklist to ensure proper preparation and planning for international negotiations: 1. Assessment of the situation and the people 2. Facts to confirm during the negotiation 3. Agenda 4. Best alternative to a negotiated agreement (BATNA) 5. Concession strategies 6. Team assignments

The International Communication Process

1. Information source 2. Encoding 3. Message Channel 4. Decoding 5. Receiver 6. Feedback 7. Noise the communications process steps are encased in Cultural Context A and Cultural Context B to illustrate the influences complicating the process when the message is encoded in one culture and decoded in another. If not properly considered, the different cultural contexts can increase the probability of misunderstandings.

Demand In Global Business2Business Markets Factors

1. demand in industrial markets is more volatile 2. Stages of industrial and economic development affect demand for industrial products 3. the level of technology of products and services makes their sale more appropriate for some countries than others

Stages of Economic Development

1. traditional society - the most important industrial demand, associated with natural resource extraction 2. preconditions for takeoff-manufacturing is beginning 3. takeoff 4. drive to maturity 5. age of mass consumption

Forfaiting

A financing technique that may be used in an international transaction in which the seller makes a one-time arrangement with a bank or other financial institution to take over responsibility for collecting the account receivable.

Evaluating and Controlling Sales Representatives

A good sales representative produces big numbers The primary control tool used by American sales managers is the incentive system, whereas this may not be the case in other cultures Particularly difficult in relationship-oriented cultures: -where teamwork is favored over individual effort -closer supervision is expected and may even be appreciated -managers may see measures of individual performance as relatively unimportant

Product Attributes and Benefit Segmentation

A market offering really is a bundle of satisfactions the buyer receives. This package of satisfactions, or utilities, includes the primary function of the product or service, along with many other benefits imputed by the values and customs of the culture. Different cultures often seek the same value or benefits from the primary function of a product But while usually agreeing on the benefit of the primary function of a product, consumers may perceive other features and psychological attributes of the item differently

Letter of credit

A promise by the bank to pay the seller a given amount if certain conditions are met. usually shipping documents. affords the seller the greatest degree of protection

ISO 9000s

A series of international industrial standards originally designed by the International Organization for Standardization to meet the need for product quality assurances in purchasing agreements.

Cultural Diversity

Ad campaigns and product brand names being communicated may mean different things to different cultures

Administered Pricing

Administered pricing is an attempt to establish prices for an entire market Such prices may be arranged through the cooperation of competitors; through national, state, or local governments; or by international agreement. The legality of administered pricing arrangements of various kinds differs from country to country and from time to time. A country may condone price fixing for foreign markets but condemn it for the domestic market, for instance.

Dumping

An export practice, generally prohibited by laws and subject to penalties and fines, defined by some as the selling of products in foreign markets below the cost of production ab by others as the selling of products at below the price of the same goods in the home market

Mobile Phone Applications

As the numbers of mobile phones continues to explode around the world, now at 5.9 billion, so do the number of applications. The top 1 percent of mobile phone users consume half of the world's bandwidth.

Types of Countertrade

Barter: is the direct exchange of goods between two parties in a transaction Compensation deals: is the payment in goods and in cash Counter-purchase or off-set trade: the seller agrees to sell a product at a set price to a buyer and receives payment in cash and may also buy goods from the buyer for the total monetary amount involved in the first contract or for a set percentage of that amount, which will be marketed by the seller in its home market Buy-back: This type of agreement is made the seller agrees to accept as partial payment a certain portion of the output that are produced from the plant or machinery that are sold to the buyer

Government Influenced Pricing

Companies doing business in foreign countries encounter a number of different types of government price setting To control prices, governments may establish margins, set prices and floors or ceilings, restrict price changes, compete in the market, grant subsidies, and act as a purchasing (monopsony also known as buyers monopoly) or selling monopoly

Client Followers

Companies, often providers of services, that follow companies that first moved into a foreign market; for example, an American insurance company setting up in Mexico to serve a U.S. auto company that had previously opened a factory there.

host country restrictions

Concerns about foreign corporate domination, local unemployment, and other issues cause some countries to restrict the number of non-nationals allowed to work --Most countries have specific rules, including the U.S., controlling the number of foreigners allowed to work or train within their borders In the past, personnel gained foreign-country experience by being sent to lower management positions to get the training before assuming top-level foreign assignments

Countertrade as a Pricing Tool

Countertrade is a pricing tool that every international marketer must be ready to employ

International Public Relations

Creating good relationships with the popular press and other media to help companies communicate messages to their publics—customers, the general public, and governmental regulators—is the role of public relations (PR) -The job consists of not only encouraging the press to cover positive stories about companies, but also of managing unfavorable rumors, stories, and events -Good public relations is an important part of international IMC as it helps alleviate negative reputation and enhance the image of the company.

Cost of Exporting: Exchange Rate Fluctuations and Varying Currency Values

Currency values swing vis-à-vis other currencies on a daily basis, which may make it necessary to increase prices

The Volatility of Derived Demand

Derived Demands- demand that is dependent on the consumption/demand for the end products firms producing industrial products have more reasoning to venture abroad to lessen the natural volatility of the industrial markets -Industrial products experience cyclical swings in demand 2 factors for industrial demand: 1)Professional buyers tend to act in concert 2)derived demand accelerates changes in markets

Designing Compensation Systems: For Expatriates

Designing compensation is a challenge: -when a company operates in a number of countries -has individuals who work in a number of countries -when the sales force is composed of expatriate and local personnel Fringe benefits play a major role in many countries Pay can be a significant factor in making it difficult for a person to be repatriated Short-term assignments for expatriates further complicate the compensation issue, may involve overseas premiums called separation allowances

Direct Mail

Direct mail is a viable medium in an increasing number of countries. It is especially important when other media are not available. Even if direct mail is available, it may not work due to high illiteracy rates in some countries

Getting Paid: Foreign Commercial Payments

Export letters of credit opened in favor of the seller by the buyer handle most American exports Another important form of international commercial payment is bills of exchange drawn by sellers on foreign buyers Cash places unpopular burdens on the customer and typically is used when credit is doubtful, when exchange restrictions within the country of destination are such that the return of funds from abroad may be delayed for an unreasonable period, cash in advance is used Sales on open accounts are not generally made in foreign trade except to customers of long standing with excellent credit reputations or to a subsidiary or branch of the exporter Inconvertible currencies and cash-short customers can kill an international sale if the seller cannot offer long-term financing. Unless the company has large cash reserves to finance its customers, a deal may be lost. Forfaiting is a financing technique for such a situation

Diference in Values

Four are held strongly and deeply by most Americans seem to frequently cause misunderstandings and bad feelings in international business negotiations: -Objectivity—reflects the importance of objectivity in the American culture -Competitiveness and Equality—values of each participating cultural group are roughly reflected in the economic outcomes -Time—passage of time is viewed differently across cultures and how these differences most often hurt Americans

Approaches t oInternational Pricing: Full-cost vs. Variable-Cost

Full-Cost Pricing: no unit of a similar product is different from any other unit in terms of cost, which must bear its full share of the total fixed and variable cost. Variable-Cost Pricing: firms regard foreign sales as bonus sales and assume that any return over their variable cost makes a contribution to net profit

Technology and Market Demand

Group countries based on their ability to benefit and use technology, to help jump stages of economic development best indicators is the quality of the educational system Technology is the key to both economic growth and competitive edge

ISO 9000 standards

ISO 9000s, a series of five international industrial standards (ISO 9000-9004) originally designed by the International Organization for Standardization in Geneva to meet the need for product quality assurances in purchasing agreements -concerns the registration and certification of a manufacturer's quality system -It is a certification of the existence of a quality control system a company has in place to ensure it can meet published quality standards -standards do not apply to specific products -certification of the production process only, and does not guarantee that a manufacturer produces a "quality" product or service. -The series describes three quality system models, defines quality concepts, and gives guidelines for using international standards in quality system

work councils

In Europe, work councils ( that is, internal labor union committees) are very much involved setting rules about compensation and other human resources policies companywide, even for sales people.

Pricing Objectives

In general, price decisions are viewed in two ways: -Pricing as an active instrument of accomplishing marketing objectives (the company set prices) -Pricing as a static element in a business decision ( the company follows market prices) The more control a company has over the final selling price of a product, the better it is able to achieve its marketing goals It is not always possible to control end prices Broader product lines and the larger the number of countries involved, the more complex the process of controlling prices charged to the end user

price quotations

In quoting the price of goods for international sale, a contract may include specific elements affecting the price, such as credit, sales terms, and transportation Price quotations must also specify the currency to be used, credit terms, and the type of documentation required A quantity definition might be necessary because different countries use different units of measurement

Production & Cost Limitations

In some markets costs are prohibitive to advertise on conventional advertising media; other countries may have low quality paper to print advertising

Cost of Exporting: Inflation

Inflation causes consumer prices to escalate and the consumer is faced with rising prices that eventually exclude many consumers from the market

Selecting Sales & Marketing Personnel

International personnel requirements and preferences vary considerably. -Maturity: Managers and sales personnel working abroad typically must work more independently than their domestic counterparts. The company must have confidence in their ability to make ethical decisions and commitments without constant recourse to the home office, or they cannot be individually effective. -Emotional Stability: They need sensitivity to behavioral variations in different countries, but they cannot be so hypersensitive that their behavior is adversely affected. -Breadth of Knowledge: Knowledge of a variety of cultures and languages is helpful. -Positive Outlook: People who do not like what they are doing and where they are doing it stand little chance of success, particularly in a foreign country. Failures usually are the result of overselling the assignment, showing the bright side of the picture, and not warning about the bleak side. -Flexibility: Expatriates working in a foreign country must be particularly sensitive to the habits of the market; those working at home for a foreign company must adapt to the requirements and ways of the parent company. Successful adaptation in international affairs is based on a combination of attitude and effort. -Cultural Empathy: Similar cultural values would be an asset in this area as well. And not only smaller cultural distances but also the direction of the cultural exchange can make a difference. That is, some report that it is easier for an American to work in China than vice versa. -Energetic and Enjoy Travel: Many international sales representatives spend about two-thirds of their nights in hotel rooms around the world. Going through the long lines of customs and immigration after a 15-hour flight requires a certain kind of stamina not commonly encountered. Some argue that frequent long flights can damage your health. Finally, Selection mistakes are costly and a manager's culture also affects his/her performance.

Proactive countertrade strategy

Is there a ready market for the goods bartered? Is the quality of the goods offered consistent and acceptable? Is an expert needed to handle the negotiations? Is the contract price sufficient to cover the cost of barter and net the desired revenue?

Leasing in International Markets

Leasing opens the door to a large segment of nominally financed foreign firms that can be sold on a lease option but might be unable to buy for cash Leasing can ease the problems of selling new, experimental equipment, because less risk is involved for the users Leasing helps guarantee better maintenance and service on overseas equipment Equipment leased and in use helps sell other companies in that country Lease revenue tends to be more stable over a period of time than direct sales would be

Cost of Exporting: Middleman and Transportation cost

Longer channel length, performance of marketing functions and higher margins may make it necessary to increase prices

The Pervasive Impact of Culture on Negotiation Behavior

Looking broadly across the several cultures, two important lessons stand out: -Regional generalizations very often are not correct. For example, Japanese and Korean negotiation styles are quite similar in some ways, but in other ways, they could not be more different. -Japan is an exceptional place: On almost every dimension of negotiation style considered, the Japanese are on or near the end of the scale (high). Cultural differences cause four kinds of problems in international business negotiations at the levels of: 1. Language 2. Nonverbal behaviors 3. Values 4. Thinking and decision- making processes The order is important; the problems lower on the list are more serious because they are more subtle.

Approaches to Lessening Price Escalation

Lowering Cost of Goods: Firms can lower costs by eliminating costly features in products or by manufacturing products in countries where labor costs are cheaper Lowering Tariffs: Firms can lower prices by categorizing products in classifications where the tariffs are lower Lowering Distribution Costs: Firms can design channels that are shorter, have fewer middlemen, and by reducing or eliminating middleman markup Using Foreign Trade Zones: Firms can manufacture products in free trade zones where the incentive offered is the elimination of local taxes, which keep prices down

sales promotion

Marketing activities that stimulate consumer purchasing and dealer effectiveness and cooperation

Newspapers

Most U.S. cities have just one or two major daily newspapers, but in many countries, there are so many newspapers that an advertiser has trouble achieving even partial market coverage

Satellite & Cable TV

Of increasing importance in TV advertising is the growth and development of satellite TV broadcasting. Advertisers and governments are both concerned about the impact of satellite TV. Governments are concerned because they fear further loss of control over their airwaves and the spread of "American cultural imperialism

Foreign-Language skills

Opinions are mixed on the importance of a second language for a career in international business. There are those whose attitude about another language is summed up in the statement that "the language of international business is English." Proponents of language skills argue that learning a language improves not only cultural understanding but also the student's intelligence! Others point out that to be taken seriously in the business community, the expatriate must be at least conversational in the host language. Some recruiters want candidates who speak at least one foreign language, even if the language will not be needed in a particular job. Having learned a second language is a strong signal to the recruiter that the candidate is willing to get involved in someone else's culture

Preparing US Personnel for Foreign Assignments

Overcoming Reluctance to Accept a Foreign Assignment Reducing the Rate of Early Returns Successful Expatriate Repatriation

Seperation Allowances

Payment of overseas premiums to employees who take on short term foreign assignments and travel without their family; allowance generally compensates for all excess expenses and any tax differences

Developing Cultural Awareness

People with cultural skills can: -Communicate respect and convey verbally and nonverbally a positive regard and sincere interest in people and their culture. -Tolerate ambiguity and cope with cultural differences and the frustration that frequently develops when things are different and circumstances change. -Display empathy by understanding other people's needs and differences from their point of view -Remain nonjudgmental about the behavior of others, particularly with reference to their own value standards. -Recognize and control the SRC, that is, recognize their own culture and values as an influence on their perceptions, evaluations, and judgment in a situation. -Laugh things off—a good sense of humor helps when frustration levels rise and things do not work as planned.

Radio & TV

Possibly because of their inherent entertainment value, radio and television have become major communications media in almost all nations. Now high definition television (HDTV) appears to be starting to take off worldwide as well. Television and radio advertising availability varies between countries. Some countries do not permit any commercial radio or television.

quality defined by the buyer

Quality for many goods is assessed in terms of fulfilling specific expectations - no more and no less Price- quality relationship is an important factor in marketing industrial products A lack of universal standards is another problem in international sales of industrial products

Other Media

Restrictions on traditional media or their availability cause advertisers to call on lesser media to solve particular local-country problems. The cinema is an important medium in many countries, as are billboards and other forms of outside advertising. Billboards are especially useful in countries with high illiteracy rates

Dumping

Selling goods in another country below market prices World Trade Organization (WTO) rules allow for the imposition of a duty when goods are dumped A countervailing duty (antisubsidy duty) or minimum access volume (MAV), which restricts the amount a country will import, may be imposed on foreign goods benefiting from subsidies whether in production, export, or transportation (usually imposed per WTO rules) One approach classifies international shipments as dumped if the products are sold below their cost of production The other approach characterizes dumping as selling goods in a foreign market below the price of the same goods in the home market

Approaches t oInternational Pricing: Skimming vs. Penetration

Skimming Pricing: This is used to reach a segment of the market that is relatively price insensitive and thus willing to pay a premium price for a product Penetration Pricing: This is used to stimulate market growth and capture market share by deliberately offering products at low prices

Social Media

Social media (such as social networking, blogs, virtual worlds, and video sharing) can be powerful marketing tools, but marketers are just beginning to loosen control and let consumers interact with brands on their own terms. Consumer- generated content is having an impact on brands (both positive and negative), and new media are on the agendas of marketers of all products, not just those targeted at young people. Thus, it is vital that marketers follow, and participate in, the conversations consumers are having online

Virtual Expatriates

The Internet and other advances in communications technologies are creating a new breed of expatriate, the virtual one With increasing frequency, virtual international sales teams are being used Virtual expatriates manage operations in other countries but do not move there. They stay in hotels and make long visits. Some spend up to 75 percent of their working time traveling. Close contact with subordinates and customers is tougher for virtual expatriates. But, virtual expatriates' families do not have to be uprooted, and executives can stay in closer touch with the home office. From the firm's perspective, a virtual assignment may be the only option to avoid the extra expenses of an actual executive move

relationship marketing

The aspects of marketing products that depend on long-term association with customers; an important factor in b2b context and especially important in most international markets, where culture dictates strong ties between people and companies

price/quality relationship

The balance between a product's price and how well the product performs. Often the price-quality of a product is ideal if it meets basic expectations and no more, allowing it to be priced competitively.

The Changing Profile of the Global Manager

The choice of company leaders increasingly dependent on: -international competition -globalization of companies, -technology, -demographic shifts and -the speed of overall change will govern It will be difficult for a single-discipline individual to reach the top in the future Fewer companies today limit their search for senior-level executive talent to their home countries American-style diversity is not shared by companies in competitive countries in Asia

Designing the Sales Force

The complexities of designing an international sales force include deciding on what type of selling, how many people to deploy on the field and what kind of assignments to give them. Based on analyses of current and potential customers, the selling environment, competition, and the firm's resources and capabilities, decisions must be made regarding: -the numbers -characteristics and a -assignments of sales personnel Distribution strategies will often vary from country to country: -some markets may require a direct sales force, whereas others may not -the hard sell that may work in some countries can be inappropriate in others -Selling in information-oriented cultures such as Germany may also allow for greater use of expatriates -Relationship-oriented countries such as Japan will require the most complete local knowledge (natives) -Many advanced operations research tools developed in the U.S. can be adapted to foreign markets -Many things can differ across cultures: the length of sales cycles the kinds of customer relationships and the types of interactions with customers

Pricing Policy

The country in which business is being conducted, the type of product, variations in competitive conditions, and other strategic factors affect pricing activity Active marketing in several countries compounds the variables relating to price policy An explicitly thought out, defined pricing policy helps avoid setting a price in haste Transfer pricing

Public Relations (PR)

The effort made by companies to create positive relationships with the popular press and general media and to communicate messages to their publics, including customers, the general public, and government regulators.

Local Nationals

The historical preference for expatriate managers and salespeople from the home country is giving way to a preference for local nationals -This preference is because they can transcend both cultural and legal barriers They cost less to maintain than a staff of expatriates in some places The disadvantages of hiring local nationals are: -the tendency of headquarters personnel to ignore their advice. -their influence is often reduced by their limited English, communication skills and lack of understanding of home-office politics -their lack of availability

Third-country nationals (TCNs)

The internationalization of business has created a pool of third-country nationals (TCNs), expatriates from their own countries working for a foreign company in a third country The TCNs are a group whose nationality has little to do with where they work or for whom American companies often seek TCNs from other English-speaking countries to avoid the double taxation costs of their American managers

Recruiting Marketing and Sales Personnel

The largest personnel requirement abroad for most companies is the sales force, recruited from three sources: -expatriates, -local nationals and -third-country nationals Sales and marketing executives can be recruited via the advertising, employment agencies or executive search firms, or personal referrals (which is the preferred method in many relationship-oriented countries)

Parallel imports (gray markets)

The possibility of a parallel market occurs whenever price differences are greater than the cost of transportation between two markets On account of competition, firms may have to charge different prices from country to country Parallel imports develop when importers buy products from distributors in one country and sell them in another to distributors who are not part of the manufacturer's regular distribution system The possibility of a parallel market occurs whenever price differences are greater than the cost of transportation between two markets Thus, it is possible for an intermediary to buy products in countries where it is less expensive and divert it to countries where the price is higher and make a profit

Noise

The term for an impairment to the communication process comprising external influences, such as, competitive advertising, other sales personnel, and confusion at the receiving end. Noise can disrupt any step of the communication process and is frequently beyond the control of the sender or the receiver.

Magazines

The use of foreign national consumer magazines by international advertisers has been notably low for many reasons. Few magazines have a large circulation or provide dependable circulation figures. Technical magazines are used rather extensively to promote export goods, but paper shortages cause placement problems

Differences in Language and NonVerbal Behaviors

The variation across cultures is greater when comparing linguistic aspects of language and nonverbal behaviors than when the verbal content of negotiations is considered The language advantages of the Japanese executive in the description of the aisatsu that opened the chapter were quite clear. However, the most common complaint heard from American managers regards foreign clients and partners breaking into side conversations in their native languages This perception is a frequent American mistake. The usual purpose of such side conversations is to straighten out a translation problem

Cost of Exporting: Taxes, Tariffs, and Administrative costs

These costs results in higher prices, which are generally passed on to the buyer of the product

Differences in Thinking and Decision-Making Processes

When faced with a complex negotiation task, most Westerners divide the large task up into a series of smaller tasks. Issues such as prices, delivery, warranty, and service contracts may be settled one issue at a time, with the final agreement being the sum or the sequence of smaller agreements In Asia, however, a different approach is more often taken wherein all the issues are discussed at once, in no apparent order, and concessions are made on all issues at the end of the discussion The Western sequential approach and the Eastern holistic approach do not mix well. American bargainers should anticipate such a holistic approach and be prepared to discuss all issues simultaneously and in an apparently haphazard order. Important signals of progress can be the following: -Higher-level foreigners being included in the discussions. -Questions beginning to focus on specific areas of the deal. -A softening of attitudes and positions on some of the issues—"Let us take some time to study this issue." -At the negotiation table, increased talk among themselves in their own language, which may often mean they're trying to decide something. -Increased bargaining and use of the lower-level, informal, and other channels of communication.

bill of exchange

a form of International commercial payment by sellers on foreign buyers; seller assumes all risk until the $ is received

exclusive distribution

a practice often used by companies to maintain high retail margins encourage retailers to stock large assortments, or to maintain the exclusive-quality image of a product, can create a favorable condition for parallel importing

Countertrade

a type of transaction in which goods are imported and sold by a company from a country in exchange for the right or ability to manufacture and/or sell goods in that country

countervailing duty

additional tariff placed on an imported product that a nation believes is receiving an unfair subsidy

derived demand

demand that is dependent on another source; it can be fundamental to the success of efforts to sell capital equipment and big-ticket industrial services. For example, the demand for commercial airliners is derived from the demand for air travel

Cartels

exists when various companies producing similar products or services work together to control markets for the types of goods and services they produce

Media Limitations

in some underdeveloped countries, there is a shortage of advertising media such as radio stations, print media (newspapers, magazines), and television stations, cable TV, and satellite TV

sales promotions

marketing activities that stimulate consumer purchases and improve retailer or middlemen effectiveness and cooperation -Sales promotions are short-term efforts directed to the consumer or retailer to achieve such specific objectives as consumer-product trial or immediate purchase Examples: Cents-off In-Store Demonstrations Samples Coupons Gifts Product Tie-Ins Contests Sweepstakes Sponsorship of Special Events, Point-Of-Purchase Displays

The Internet

the Internet has emerged as a viable medium for advertising and must be included in a company's possible media mix. Its use in business-to-business communications and promotion via catalogs and product descriptions is rapidly gaining in popularity. Although limited in its penetration of households globally, the Internet is being used by a growing number of companies as an advertising medium for consumer goods.

price escalation

the added costs incurred as a result of exporting products from one country to another

Integrated Marketing Communications

the collective arrangement of efforts and methods to sell a product or service, including advertising, sales promotions, trade shows, personnel selling, direct selling, and public relations

Factors in Price Escalation: Cost of Exporting

the term relates to situations in which ultimate prices are raised by shipping costs, insurance, packing, tariffs, longer channels of distribution, larger middlemen margins, special taxes, administrative costs, and exchange rate fluctuations