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International Marketing

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Wine assignment handed out last week. THURSDAY 8 April. Last day of teaching before Easter break. Assignment box tba. penalties 2% per weekday ... – PowerPoint PPT presentation

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Title: International Marketing


1
International Marketing
  • Tim Beal
  • Lecture 4
  • 23 March 2004

2
Today
  • Housekeeping
  • Impact of Technology
  • transportation
  • internet
  • Korea
  • Wine industry and SWOT

3
Housekeeping
  • Wine assignment handed out last week
  • THURSDAY 8 April
  • Last day of teaching before Easter break
  • Assignment box tba
  • penalties 2 per weekday
  • Hand in to Mrs Jessie Johnston, SMIB office,
    Rutherford House 11th fl

4
Course so far
  • Information and IM
  • Aspects of the international business environment
  • the environment in which IM takes place

5
international business environment
  • Economics of globalisation
  • Politics of globalisation
  • Read in textbook, notes from last week AND
    newspapers/TV
  • 3 Social trends
  • Prof David
  • Thanks so much for that wonderful chance to speak
    to your very responsive
  • class. I am sure you enjoy teaching that class.
    The topics and issues you
  • tackle seem fascinating and cutting edge.

6
Coming next
  • 4 Technology
  • Next week- culture
  • Following week week Marketing of education
    services services marketing
  • after breakgtgt4Ps in IM

7
Textbook chapters
  • Chapters for the next 2 weeks wrong way round
  • Lecture 7 add chapter 10
  • amended schedule on web

8
Technology Overview
  • Distribution
  • transportation
  • Internet

9
Internet
  • History
  • Structure and characteristics
  • Global data growth, distribution of internet
    markets
  • Types of websites
  • Globalisation
  • Internet no longer American
  • Internet and marketing

10
Technology
  • Technology affects every aspect of marketing/IM
  • every good/service is produced, promoted and
    distributed by technology
  • even price and payment affected
  • Here concentrate on some key elements
  • distribution
  • internet
  • two are closely connected

11
Distribution
  • distribution tends to be more important in IM
    than in M
  • distances tend to be greater
  • distance from NY to Toronto less than NY to SF
  • Costs of distribution are substantial
  • Falling transportations costs key driver of
    international marketing

12
Transportation costs
  • Silk route an example
  • only very high value (expensive), non-perishable
    items feasible
  • transportation revolution made global economy
    possible
  • Ships gtgtgtrailways gtgtInternal combustion
    engine/roadsgtgtships (tankers/containers) gtgtair

13
Example
  • The cost of moving farm produce and manufactured
    goods over long distances fell 95 percent between
    1815 and 1860. With that drop, farmers could grow
    wheat in Indiana and sell it at a profit in New
    York City, while New England manufacturers could
    make work shoes and sell them to the farmers of
    Indiana

14
Other technological impacts on transportation
  • Can create new IM possibilities
  • refrigeration
  • transformed 19th century NZ
  • now chilled, gas-packed meats can fetch high
    prices in affluent markets
  • also happening with fruits and vegetables
  • much sent by plane

15
Combination
  • Combination of
  • cheaper
  • faster
  • improved storage
  • greatly increases range of products that can be
    marketed internationally
  • distance
  • market segments

16
Investment
  • Development of new planes, airports, container
    terminals etc. extremely costly
  • Nevertheless, new airports have been built
    recently in
  • Korea (Incheon)
  • Kuala Lumpur
  • Hong Kong
  • Japan (Kansai)
  • airports around the world being upgraded
  • proximity to airport important for IM business
  • goods, tourism

17
Globalisation of production
  • Because of cheaper transport, production can be
    moved away from target markets
  • US, Japan, KoreaTaiwan gtgtgtproduction shifting to
    cheaper places
  • labour
  • land
  • environmental standards
  • increases role of IM
  • domestic productiongtgtgtmove offshoregtgtgtimported
    back

18
Geography is history
  • Internet takes this process to its limits
  • Distance has little effect on
  • cost
  • time

19
What is the internet?
  • global network of computers
  • origins in US defense
  • gtgtuniversities
  • business use very recent
  • IBM survey in US
  • 1994 - less 50 aware of internet
  • 1999 - intricate part
  • How do we conceptualise the structure of the
    Internet?

20
Structure of Internet
21
Internet
  • Two main technological components
  • Email
  • World Wide Web
  • different characteristics
  • two main types
  • b2c and b2b

22
Characteristics of email
  • proactive goes from sender to recipient
  • need to have recipients address
  • SPAM junk email
  • simple to buy large number of email addresses and
    send junk
  • Is it effective?
  • Currently mainly text-based but increasing use
    of graphics

23
Characteristics of the Web
  • reactive customer has to come to website
  • task 1 attracting hits
  • task 2 converting hits to sales
  • multimedia
  • use of media should be tailored to purpose of
    website
  • content is king should be driven by customer
    needs not technology

24
Customer
  • B2B is main use of Internet
  • cuts costs
  • makes communication with suppliers, distribution
    channels, etc faster and cheaper
  • 1/3 of all US B2B via Internet
  • ordering stationery at VUW
  • B2C has higher profile
  • big names Amazon, yahoo
  • dot coms have had a bad time over 4 years

25
Growth of the Internet
  • number of people/businesses online has grown
    markedly
  • Internet has spread from US to Europe, NZ,
    India, ChinaNK
  • Data on consumer base
  • growth
  • uneven spread
  • Look at some recent data

26
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27
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28
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29

30
Internet use wealth?
  • Relationship between wealth and internet use
  • but other factors as well
  • culture of adopting innovation
  • language
  • English
  • Telecommunications infrastructure and costs

31
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32
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33
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34
Future
  • Rapid but uneven growth in users
  • e-commerce - predictions vary widely

35
US e-commerce small but growing
  • 1.4 of SB Internet use - e-commerce sales
  • Internet sales - lt1 of total US retail sales
  • only 5 of WWW visitors become customers
  • online retail marketing 200 annual growth
  • estimates vary widely
  • 25 billion - 300 billion

36
Customer characteristics
  • Gender originally overwhelmingly male, now more
    balanced
  • Age tend to be younger (20-30) growth in
    teenage and senior market
  • Income tend to be higher income
  • Education tend to be more highly educated
  • (role of universities?)

37
Types of websites
  • Static billboards
  • Dynamic billboards
  • Database driven
  • Storefronts
  • 4th type gtgte-commerce

38
Static billboards
  • brochureware
  • put hardcopy on line
  • fairly uncommon now

39
Dynamic billboards
  • Updated
  • but how often?
  • Relative ease and cheapness of updating great
    advantage over print media
  • Corbans

40
Database driven
  • interactive interface to link customers and
    products/services
  • Library databases

41
Storefronts
  • Database interface
  • purchase, pay and sometimes consume online
  • Amazon.com

42
What is Internet best for?
  • Positive
  • global niche
  • electronic delivery
  • high information content
  • Negative
  • low value physical product
  • undifferentiated product
  • local market (eg local baker)

43
Examples
  • Information agency
  • specialised field
  • with alliances offers 24 hour service
  • quick turnaround (all electronic)
  • Software developers
  • Bangalore
  • utilises relatively cheap, skilled labour
  • but delivers as fast as Silicon Valley

44
E-Commerce and Globalisation
  • Internet (WWW) inherently global
  • uneven spread of connectivity but does allow
    unprecedented access to global markets
  • Still often physical constraints
  • distribution
  • payment systems (eg lack of credit cards in
    China)
  • Global environment is complex - legal, political
    and cultural

45
Global cultures and exposure
  • Internet exposes companies usually to wider range
    of cultures and languages
  • Few, if any, companies - even largest- have yet
    addressed challenge of multicultural, polyglot
    Internet customers
  • Internet exposes companies to unprecedented
    global competition
  • local bookshop - Amazon.com

46
Disintermediation and leveling
  • Disintermediation
  • removal of intermediaries
  • ie channels of distribution
  • travel agents
  • Leveling
  • leveling playing field between big and small
    companies
  • brand and resources still count

47
Good, bad and the ugly
  • dangers of humour
  • Sapich's 'Purple Death'
  • Illegibility
  • Trade Enterprise New Zealand

48
Localisation
  • websites should reflect needs of customers
  • language
  • local currency
  • local information
  • Victoria International - costs calculator

49
Globalisation of website airlines
  • Singapore bestbut what of the others?
  • MARK302 Links

50
Conclusions
  • Internet will grow but predications vary
    considerably
  • Topography of business will change in
    unpredictable ways
  • More volatile relationship between companies and
  • each other
  • customers
  • large companies

51
Internet no longer American
  • Local growth and use will differ from the States
  • leapfrogging
  • adoption truncation
  • local variation

52
Leapfrogging
  • follower advantage you know whats ahead so can
    cut corners
  • leapfrog over old technologies into new
  • ie mobile in China..
  • Not many landline telephones so great growth in
    mobiles

53
Adoption truncation
  • in States better off, better educated males took
    lead
  • uptake elsewhere more evenly spread

54
Local variation
  • China credit cards uncommon so payment on
    delivery
  • Japan use network of convenience stores
  • India Cybercafes
  • use of vernacular languages will grow

55
basic rule
  • as elsewhere in IM
  • keep asking questions
  • every aspect of marketing strategy needs to be
    re-examined
  • customer focus
  • what does the customer wanthow do customers vary
    across the world?

56
What weve covered on the Internet
  • History
  • Structure and characteristics
  • Global data growth, distribution of internet
    markets
  • Types of websites
  • Globalisation
  • Internet no longer American
  • Internet and marketing

57
Korea
  • Background
  • 2 Koreas
  • South Korean market
  • Glance at video

58
Background
  • Map Korea between China and Japan
  • Heavily influenced by China
  • Philosophy, religion, writing system..
  • Philosophy, religion
  • More Confucian than China
  • Buddhism (on top of shamanism)
  • But Christianity very important
  • 49 of South Koreans classified as Christian

59
Language
  • Korean is very different language from Chinese
  • But used Chinese writing system
  • As do Japanese
  • But also invented their own Hangul
  • KOTRA
  • Links page Learning Korean

60
Two Koreas
  • 1945 Korea divided into two North and South
    gtgtKorean War 1950-53
  • Some info on North Korea on my website
  • Focus on South Korea (Republic of Korea ROK)
  • Korea South Korea

61
Korean Market
  • Lots of problems but has been extremely fast
    growing
  • Vibrant and dynamic
  • Nearly caught up with NZ, overtaking stagnant
    Japan

62
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63
Korean economy
  • World leader in electronics, Internet use,
    shipbuilding, cars
  • Imports?
  • Skins and hides, beef, logs,..agricultural
    products and raw materials
  • And now Education
  • Articles of Korea/education on coursepage, etc.

64
Korean business environment
  • Confucian ..like Japan, Taiwan, China
  • But different
  • Video Doing business with Koreans
  • Available in Library

65
Foreign companies in Korea
  • Carrefours
  • Coca Cola
  • Zespri
  • ..wine
  • Carrefour overtakes Coke

66
Wine Industry and Project
67
International Marketing of wine
  • Wine as case study
  • Wine is interesting example of IM
  • Product extension to
  • New countries
  • New consumer segments
  • Demonstrates inter-relationship between 4Ps

68
Look back at history
  • Article What is wine?
  • What is Wine?
  • Grape wine originated in Mediterranean basin
  • Egypt, Greece, Italy
  • Now grown, and consumed, around the world
  • Many other cases of foods spreading to new places
  • Examples?

69
Examples
  • Americas
  • Potatoes, corn, turkey, tobacco
  • China
  • Rice, noodles, silk to Europe
  • Tea to India
  • Chinese gooseberrygtgtNZgtgtkiwifruit
  • Zespri now planting in Jeju

70
Wine consumption and production
  • Wine long history of export
  • Production
  • 19 century virtually exclusive to Western
    Europe
  • Carried by migrants to
  • North and South America
  • Canada?
  • 20th century
  • Australia
  • Later to New Zealand

71
Continuing process
  • First export
  • Then shift of production
  • Usually economic reasons (e.g. handphones to
    China)
  • Also migration eg wine. kimchi
  • Process not complete
  • Michel Rod and kimchi
  • You and cheese

72
Are food products different?
  • Analyze IM in various ways
  • Environment SLEPT
  • Marketing 4 Ps
  • In each aspect can ask
  • Are food products special?
  • Is wine a special food product?

73
Yes
  • SLEPT
  • Economic new imported foods often very
    expensive
  • What is the main aspect?
  • Social
  • Culture, religion gtgtlegal and political
  • Islam prohibits what?
  • Pork, alcohol

74
Inter relationships
  • Expensiveness is contingent
  • E.g. KFC is not expensive, heroin is
  • Price is factor of
  • Production costs
  • Economies of scale
  • Political/legal constraints
  • Distribution and communication costs
  • Economies of scale
  • Pricing policies

75
Marketing challenge
  • Canadian and NZ winemakers 3 sets of challenges
    in Korea
  • Expand market for wine
  • Expand market for New World wines
  • Expand market for particular brands

76
Old World New World
  • What do these terms mean?
  • Old World
  • Traditional wine producing/exporting countries
  • France, Italy, Spain
  • New World
  • Americas, Australia, NZ

77
Place of origin and branding
  • Country of origin effect
  • E.g. French perfumes, Korean IT
  • Old World wines identified by place of production
  • E.g. Champagne
  • New World originally tried to imitate
  • E.g. Australian champagne

78
Australian champagne
  • Legal objections from French
  • Methode champagnoise one solution
  • Main solution
  • Identifying wines by grape variety rather than
    place of production
  • Grapes can be moved, places cannot

79
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80
Wine and culture
  • Wine - High or low involvement product?
  • Wine
  • Culturally influenced
  • Complex product
  • Many different varieties each vineyard each
    harvest different
  • Problems of customer acceptance
  • Symbol of internationalization

81
SWOT analysis
  • Environment Opportunities and Threats
  • Organisation Strengths and Weaknesses
  • Simple framework widely applicable

82
SWOT requirement and limitations
  • To be useful must be
  • Comprehensive
  • not necessarily detailed
  • Rigorous
  • Honest
  • first step, not solution
  • does not rank or quantify

83
You can SWOT anything
  • Can be used for anything
  • pharmacies, banks,country analysis
  • MARK302 Links

84
No right SWOT
  • Whats right today may be wrong tomorrow
  • Strength in one market may be weakness in other
  • eg being perceived as kiwi may be positive in
    Samoa but negative in Australia
  • opportunities can turn into threats
  • eg taken up by competitor
  • first step in analysis and planning

85
SWOT in course
  • 1st assignment on wine industry
  • utilise SWOT as part of main educational services
    project

86
This week
  • Technology
  • Transportation
  • Internet
  • Korea
  • Wine industry
  • SWOT

87
Next week
  • Janet Carruthers
  • Culture
  • FB 3
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