CHAPTER 9: international market development
Increasing internalization --> need for international marketing
9.1 The drivers of international market development
Drivers
• Excess stock (overproduction/insufficient sales) and limited growth in domestic
markets (market in your country is already opgebruikt, you can go to another)
• Comparative advantage (another country has a certain advantage in produding
certain things p.ex raw resources or work skills)
• Economies of scale (often quiet expensive to produce small amounts, too high
to get a return on investment)
• Customer relationships
• Transnational market segments: consumers needs are getting more similar
across boarders, reason to move abroad, (occurs because of migration),
similarities in lifestyles,...
9.2 The international marketing environment
Assess success of market entry in foreign markets by considering
Social factors: are people interested in the product, behaviour, in some cultures
common that grand-parents take care of the children, not in belgium
Cultural factors: beliefs, norms and values that guide behavior p.ex language,
education, religion,..
Hofstede’s cultural dimensions
• Power distance: hierarchial order
• Individualism vs collectivism: alleen vs samenwerken
• Masculinity more focused on ambition, assertive vs female interpersonal
relationships
• Uncertainty avoidance: how open is the country to new things
• Short term vs long term: are you looking for improvement in the long or short
term
• Indulgence (enjoying live,doing nice things) vs restraint(behavior is highly
restricted p.ex china)
,--> important to know the outside culture before entering with your product p.ex ebay in
russian other meaning etc
Economic factors
• Measures of per capita income
• Ownership rates of durables
• CPI (grasps changes of prices overtime) inidcator for inflation
• Unemployment rates
• GNP total value of all goods and values produced in the country
• Market and populations sizes p.ex if you want to expand
• Currency exchange rate
--> be aware because else you might expand to a market where it is destined to fail
Political and legal factors
• Quota: used to limit the amount of goods allowed into a country
• Duties: taxes in imports, disadvantage to the importer’s pricing strategy
Country-of-origin effects: the bias or influence on a consumer perception of the country
of manufacture or assembly of a product (sources: history, culture, general perception
of a country)
‘made in’ can be +/-
Consumer segments
• Glalienation: like to live minimally, negative attitude towards both local and
global consumer culture
• Glocalization: positive attitude towards both local and global brands, like the
mixing consumption
• Localization: don’t like global brands, mainly like local brands p.ex local
bakery,...
• Globalization: not interested in the local products(don’t really value them), very
interested in global brands such as zara,...
9.3 International market selection
• Market size (number of current and potential customers) and growth
• Market access (how can we reach them, what do they like)
• Geographical proximity (physical distance between the international part of the
company and the origin country)
• Psychological distance (how different are norms and values)
, • Established competitors (when competition is intense --> market entrants will
be less favourable)
• Profit potential
Recognize questions don’t learn by heart
Market entry selection criteria:
• Costs: different methods require different levels of investments
, • Flexibility: different levels p.ex long term contractual agreements
• Risk and uncertainty:
- Joint venture: can decrease risk of stepping in international markets
- Direct investment: persoon investeert direct met het doel zeggenschap te
hebben, --> reducing barriers to entry, including tariffs
• Return On Investment: is there something to win, hoeveel winst haal je uit je
investering (valt ook een beetje samen met speed, als je snel wilt berhalen
beinvloedt dat waarschijnlijk ook je markt keuze)
• Long term objectives
• Speed and time: some entry methods take months, wheras other can be
excecuted immediatly
Types of market entry methods
• Indirect exporting: you sell your products to another person who divides it on the
foreign market
• Licensing, franchising and contracting: you let another party use your business
brand name/model/... risk: less control of your brand
• Direct exporting: you target consumers directly and sell them directly to them on
the foreign market
• Joint ventures: as a business you work together with someone in the foreign
country and this reduces the risk, because your partner already knows the
market and its risks
• Direct investment: you go to a foreign country and invest in a facility in the
foreign cournty
- Green field investment: building new things
- Brown field: buying businesses and growing your business in that country
Increasing internalization --> need for international marketing
9.1 The drivers of international market development
Drivers
• Excess stock (overproduction/insufficient sales) and limited growth in domestic
markets (market in your country is already opgebruikt, you can go to another)
• Comparative advantage (another country has a certain advantage in produding
certain things p.ex raw resources or work skills)
• Economies of scale (often quiet expensive to produce small amounts, too high
to get a return on investment)
• Customer relationships
• Transnational market segments: consumers needs are getting more similar
across boarders, reason to move abroad, (occurs because of migration),
similarities in lifestyles,...
9.2 The international marketing environment
Assess success of market entry in foreign markets by considering
Social factors: are people interested in the product, behaviour, in some cultures
common that grand-parents take care of the children, not in belgium
Cultural factors: beliefs, norms and values that guide behavior p.ex language,
education, religion,..
Hofstede’s cultural dimensions
• Power distance: hierarchial order
• Individualism vs collectivism: alleen vs samenwerken
• Masculinity more focused on ambition, assertive vs female interpersonal
relationships
• Uncertainty avoidance: how open is the country to new things
• Short term vs long term: are you looking for improvement in the long or short
term
• Indulgence (enjoying live,doing nice things) vs restraint(behavior is highly
restricted p.ex china)
,--> important to know the outside culture before entering with your product p.ex ebay in
russian other meaning etc
Economic factors
• Measures of per capita income
• Ownership rates of durables
• CPI (grasps changes of prices overtime) inidcator for inflation
• Unemployment rates
• GNP total value of all goods and values produced in the country
• Market and populations sizes p.ex if you want to expand
• Currency exchange rate
--> be aware because else you might expand to a market where it is destined to fail
Political and legal factors
• Quota: used to limit the amount of goods allowed into a country
• Duties: taxes in imports, disadvantage to the importer’s pricing strategy
Country-of-origin effects: the bias or influence on a consumer perception of the country
of manufacture or assembly of a product (sources: history, culture, general perception
of a country)
‘made in’ can be +/-
Consumer segments
• Glalienation: like to live minimally, negative attitude towards both local and
global consumer culture
• Glocalization: positive attitude towards both local and global brands, like the
mixing consumption
• Localization: don’t like global brands, mainly like local brands p.ex local
bakery,...
• Globalization: not interested in the local products(don’t really value them), very
interested in global brands such as zara,...
9.3 International market selection
• Market size (number of current and potential customers) and growth
• Market access (how can we reach them, what do they like)
• Geographical proximity (physical distance between the international part of the
company and the origin country)
• Psychological distance (how different are norms and values)
, • Established competitors (when competition is intense --> market entrants will
be less favourable)
• Profit potential
Recognize questions don’t learn by heart
Market entry selection criteria:
• Costs: different methods require different levels of investments
, • Flexibility: different levels p.ex long term contractual agreements
• Risk and uncertainty:
- Joint venture: can decrease risk of stepping in international markets
- Direct investment: persoon investeert direct met het doel zeggenschap te
hebben, --> reducing barriers to entry, including tariffs
• Return On Investment: is there something to win, hoeveel winst haal je uit je
investering (valt ook een beetje samen met speed, als je snel wilt berhalen
beinvloedt dat waarschijnlijk ook je markt keuze)
• Long term objectives
• Speed and time: some entry methods take months, wheras other can be
excecuted immediatly
Types of market entry methods
• Indirect exporting: you sell your products to another person who divides it on the
foreign market
• Licensing, franchising and contracting: you let another party use your business
brand name/model/... risk: less control of your brand
• Direct exporting: you target consumers directly and sell them directly to them on
the foreign market
• Joint ventures: as a business you work together with someone in the foreign
country and this reduces the risk, because your partner already knows the
market and its risks
• Direct investment: you go to a foreign country and invest in a facility in the
foreign cournty
- Green field investment: building new things
- Brown field: buying businesses and growing your business in that country
