INTERNATIONAL ENTRY MODES Criteria for Country selection : Choosing Product to trade in International markets Global Product Strategies Strategy for new product launch STANDARDIZATION VS ADAPTATION FOREIGN MARKET ENTRY MODES

1. INTERNATIONAL ENTRY MODES Presented By: AmitKumar Avanika Babel

2. THIS PRESENTATION WILL COVER THE FOLLOWING: Introduction Criteria for country selection Various market entry modes

3. INTRODUCTION In today's globalizing world, firms are increasing, looking towards other regions of the world to trade in. What are the steps taken by the executives of these firms before deciding on which market to enter? How do they make sure they make their journey a successful one?

4. Introduction contd. The decision requires an analysis of the aspects of the foreign market. - Whether to go abroad - Which markets to enter - How to enter those markets - Choice of marketing program -Marketing organization

5. Introduction Contd. Criteria for Country selection : 1. Country/market Attractiveness in terms of the following: o Market size o Market growth and need potential in terms of demand 2. Company strength in terms of brand and accessibility 3. When the risk e.g. political is marginal compared to opportunities 4. Customer response 5. Competitive situation

6. Introduction contd. A firm becomes proactive i.e. pulled by the potentials and advantages in the foreign market due to the following reasons: 1. The firms specific advantages in terms of profit 2. The advantage of having a unique brand 3. When a firm possesses technological advantages 4. The availability of resources in the foreign countries 5. Economies of scale 6. Economic and political factors

7. Introduction Contd. A firm becomes reactive i.e. pushed by bad domestic markets when the following is evident: 1. The pressure of domestic competition 2. Poor domestic market due to stagnant or declining sales figures 3. Saturated domestic markets 4. Overproduction

8. Choosing Product to trade in I.M anything that can be offered to market to satisfy a want or need. They can be physical goods, services, experiences, events, persons, places, properties, organizations, information's & ideas. What are new products? New product line Addition to product line Repositioning to new market segments Improvements/revisions Cost reductions Reason of failure of different foreign companies like Kellogg's, Pizza hut, Mac Donald, Dominos was- Gross overestimation of spending patterns of Indian consumers Gross overestimation of strength of the transnational brand Gross underestimation of the strengths of ethnic Indian products

9. INTERNATIONAL BUSINESS APPROACHES ETHNOCENTRIC APPROACH POLYCENTRIC APPROACH REGIOCENTRIC APPROACH GEOCENTRIC APPROACH

10. ETHNOCENTRIC APPROACH Under this approach , companies market the products in various countries in the same way it does domestically. POLYCENTRIC APPROACH Under this approach, the companies customizes the marketing mix to meet the taste, performance and needs of the customers of each international market. REGIOCENTRIC APPROACH Under this approach, the company operating successfully in a foreign country thinks of thinks of exporting other neighboring countries of the host country. At this stage, the concerned subsidiary considers the regional environment ( such as laws, culture, policies etc) for formulating the policies & strategies.

11. GEOCENTRIC APPROACH Under this approach, the company analyses the tastes, preference and needs of the customers in all foreign markets and then adopts a standardized marketing mix for all the foreign markets. Coca-cola adopted this strategy by selling its popular soft drink with the same content, packaging, branding & advertisement themes worldwide Whirlpool designs a world-washer – small, stripped-down automatic washing machine for Mexico, Brazil & India. However, it modified its product for Indian market to wash the delicate “sarees”.

12. Global Product Strategies

13. Strategy for new product launch Waterfall approach Sprinkler approach

15. OPTION 1. PRODUCT EXTENSION – COMMUNICATION EXTENSION Product Strategy Communications Strategy Highlight Extension Extension Standardized product with same communications strategy across the globe. - This strategy is Cost effective - Allows for greater economies of scale - Rarely used for consumer type products except soft drink and some luxury type goods -Used mainly for industrial type products

16. OPTION 2. PRODUCT EXTENSION – COMMUNICATION ADAPTATION Product Strategy Communications Strategy Highlight Extension Adaptation Standardized product with different communications strategies across the globe. - Cost effective because communications adaptation is less expensive than the tailoring product to a local market. - Can be used for consumer type products eg. Bicycles

17. OPTION 3. PRODUCT ADAPTATION - COMMUNICATION EXTENSION Product Strategy Communications Strategy Highlight Adaptation Extension Changes made to the product, same communications strategy across the globe. - Product formulations are changed without consumers knowing it. E.g. detergents - Entails research, development expenses and tooling costs. - Do not allow for economies of scale to the extent possible under an product extension strategy - savings can be realized from the creation of a single communications strategy

18. OPTION 4. PRODUCT ADAPTATION - COMMUNICATION ADAPTATION Product Strategy Communications Strategy Highlight Adaptation Adaptation Dual adaptation: Changes made to the product, changes made to communications strategy - Recognizes the socio-cultural differences from country to country -To make this option profitable, the foreign market or markets need to be of sufficient volume - Calls for extensive research and development expenses and tooling costs

19. OPTION 5. PRODUCT INVENTION Product Strategy Communications Strategy Highlight Invention Develop new communications Usually redesigning of an original product at a lower level of complexity. - Recognizes the socio-cultural and economic differences from country to country -Leads to more purchases as a result of the reinvention of the product

21. Production

22. Marketing/communications

23. Research & Development

24. Stock Holding

25. Easier management and control

26. i.e. familiarity

27. Homogeneity of markets

28. i.e. markets available without adaptation

30. (except industrial & agricultural products)

31. Where “made in” image is important

32. e.g. France for perfumes, Sheffield for stainless steel

33. For a firm selling a small proportion of its output overseas, the incremental costs may exceed the incremental sales value

34. Consumer mobility for travellers/tourists for example standardization is expected in certain products:

35. Camera film

37. Consumer Demographics

38. Culture

39. Local custom & Tradition

40. Condition of use

41. Price

42. Mandatory Modification:

43. Normally involves either adaptation to comply with government requirements or

44. Unavoidable technical changes

46. Specified exhaust emission levels (HSE Laws & strict emission standards)

47. Local components (economic law)

48. Technical requirements such as:

49. Modification of heating/cooling systems for different climates

50. Engine modification to use locally available fuels

51. Packaging & Labelling regulations

52. Measurement system

53. So packaging size, weights, and measures of products will be modified

54. Standards of electric current

55. India- 220 volt 50 Hz

56. U.S- 110-120 Volt 60 Hz

58. Expansion into foreign markets can be achieved via the following mechanisms:

59. The Internet - Exporting

60. Licensing - Joint Venture

61. Direct Investment

62. International Agents & International Distributors- Strategic Alliances

63. FOREIGN MARKET ENTRY MODES

65. Exporting is the marketing and direct sale of domestically-produced goods in another country

66. There are direct and indirect approaches to exporting to other nations

70. Online Auction e.g. eBay

72. Franchising…. Franchising involves the organization (franchiser) providing branding, concepts, expertise, and infact most facets that are needed to operate in an overseas market, to the franchisee. Management tends to be controlled by the franchiser. Examples include Dominos Pizza, Coffee Republic and McDonald’s.

73. Franchising…. Franchising Compared to licensing: Franchising agreements tends to be longer and the franchisor offers a broader package of rights and resources Licensing agreement involves things such as intellectual property, trade secrets and others while in franchising it is limited to trademarks and operating know-how of the business

74. Turnkey Project In a turnkey project, the contractor agrees to handle every detail of the project for a foreign client, including the training of operating personnel Example, Toyota’s car plant in Adapazari, Turkey.

77. risk/reward sharing

78. technology sharing

79. joint product development

84. Xerox and Fuji: These two multinational giants, located in U.S. and Japan, respectively, joined hands to explore new markets in Europe and in Pacific Rim countries.

87. ANY QUESTIONS??