Planning for International Marketing free essay sample

After reading this chapter you should be able to: †¢ describe the strategic marketing planning process and the role of scenario planning in international marketing †¢ explain the steps involved in the international marketing planning process †¢ develop an international marketing plan †¢ illustrate the challenges to effective international marketing planning †¢ discuss the requirements for practical international marketing planning. Introduction p. 280 The competitive and rapidly changing environment of 2010 and beyond has prompted most Asia–Pacific firms pursuing international opportunities to use strategic market planning to identify, tap and profit from international markets. Successful companies periodically evaluate their market environments in order to assess changes in their opportunities and threats. External and internal environmental changes frequently require them to modify their objectives and sometimes change direction. As discussed in earlier chapters, changes in government regulations, emergence of new competitors, the introduction of new technology and the opening of new markets can change the way in which a firm does business internationally. We will write a custom essay sample on Planning for International Marketing or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page As they gain experience, develop new competencies and add more resources, firms change their objectives and sometimes their mission. Strategic market planning in international markets is essentially a way of thinking and a mode of acting. In terms of thinking, it challenges international marketers to be constantly sensitive to changes and assess the implications for marketing. In terms of acting, marketers need to be flexible and responsive in the way they plan for and manage the firm’s resources and capabilities. Toyne and Walters (1993, p. 1) provide a useful definition of strategic market planning: Strategic market planning is the systematic and periodic process used by managers to examine the environments in which their company competes, the opportunities and threats they face, the goals and objectives to be achieved, and the products and services offered in order to maintain a viable fit between their company’s capabilities and resources and the threats and opportunities that arise from a changing environment. Its purpose is to identify and develop a corporate purpose, objectives and goals, and plans of action that effectively relate the company, its businesses, and functional areas to their relevant environments and that enables the company to profitably exploit future marketplace opportunities in which it is likely to enjoy a competitive advantage. In this chapter the foundation for effective strategic market planning is laid using an adaptation of a successful Australian firm’s international marketing plan and by exploring the challenges and practical requirements for effective international marketing planning. The context and process of international marketing planning are discussed first. Lecture outline The context of international strategic marketing planning p. 280 The essential steps in scenario planning are: familiarisation – understanding the organisation, key stakeholders, their needs and expectations †¢ discovery – gaining an understanding of current trends and events and anticipating possible future discontinuities in the international environment †¢ scenario building – developing and progressively upgrading a range of scenarios that reflect events, patterns and discontinuities †¢ action and integration – developing appropriate business and marketing strategies which enable the organisation to operate effectively within the scenarios generated. Steps in the international marketing planning process p. 283 The textbook works through a real example of an Australian company, following the steps required in the planning for a new operation of a sales office in another country, following a similar process as that outlined in Case Example 8. 1. 1. Background: †¢ the industry †¢ company history 2. Situation analysis: †¢ business environment o social and cultural factors o technological factors o political and legal factors o demographic trends o seasonal and climatic factors o economic factors †¢ market analysis o the product market market characteristics and forecasts o distribution and pricing trends o positioning o market segments and needs †¢ competitor analysis o competitors’ strengths o competitors’ weaknesses o competitors’ strategies o competitors’ market positioning †¢ organisational resources and capabilities o financial capabilities o research capabilities o produ ction capacity and capabilities o management skills o domestic distribution and suppliers o promotional materials o SWOT analysis. A plan would normally continue on to address the issues of: †¢ foreign market entry strategy target market and segmentation strategy †¢ positioning strategy †¢ marketing mix strategy o product o price o promotion o placement. Evaluation of alternative marketing strategies p. 288 Segmenting international markets p. 288 Firms segment international markets by using one or a combination of segmentation bases. These include: †¢ geographic segmentation – by country or region. Regional markets often self-segment because of agreements such as Free Trade Areas †¢ economic factors – e. g. by population incomes or overall level of development †¢ political and legal factors – e. . type and stability of the government, receptivity to foreign firms, monetary regulations and amount of bureaucracy †¢ cultural factors – e. g. language, religions, values and attitudes, customs and behavioural patterns. Emerging bases of global segmentation p. 289 †¢ Global market segmentation can be defined as country groups, individual consumer groups, or potential customers with homogeneous attributes. †¢ Countries can be segmented by diffusion patterns, i. e. the speed with which consumers in that country adopt a new product or technology. Refer to Figure 8. Segments based on diffusion patterns p. 290. Consumers in lag countries may learn from the product experience of lead countries. †¢ Local differences in each country could als o be the basis of segmentation, i. e. ‘think globally, act locally’. Market positioning for international markets p. 290 What is market positioning? p. 290 Positioning refers to the way a product’s important attributes are defined by the consumers, i. e. the place the product occupies in the mind of the consumers relative to competing products. Refer to International Highlight 8. 2 Pecunia non olet – or does it? Latin for ‘money does not smell’) p. 291. Positioning strategies p. 290 †¢ Positioning takes place in the minds of consumers because consumers cannot re-evaluate products every time they make a buying decision. †¢ There are a number of positioning strategies firms can pursue: o positioning products on the needs they fill or on the benefits they offer o positioning products according to usage occasions o positioning a product for certain classes of users o positioning a product directly against a competitor o positioning a product for different product classes. Choosing and implementing a positioning strategy p. 291 †¢ In choosing the ways that a firm positions itself and its products in an overseas market may be similar to or different from that in the home market. †¢ The challenge facing the international marketer is how to differentiate the product from competing products in the same segment (or position in the market). Refer to Case Example 8. 2 p. 292. Corporate objectives p. 293 †¢ Usually include a mission statement. They often reflect new markets, new business and financial growth. Refer to Case Example 8. 3 p. 293. Marketing objectives and strategy p. 94 †¢ May focus on all or on individual priority markets. Refer to Case Example 8. 4 p. 294. †¢ May involve all international markets that the firm is currently marketing in. Economic evaluation p. 295 An economic evaluation of an international marketing strategy includes planning assumptions, underpinning the logic of the plan, sales and cost forecasts, break even analysis and sensitivity analysis to establish financial benchmarks and to establish consequences of alternative possible outcomes. Detailed financial analysis would normally be appended to the marketing plan. As Case Example 8. 5 p. 295-6 illustrates, some planning assumptions would cover: †¢ market/industry growth †¢ new technologies about to emerge †¢ sales forecasts based on the best, worst and most realistic achievable in the current economic climate †¢ profit and loss forecasts. Implementation and control p. 296 Action plans for implementation p. 296 Action program p. 296 †¢ What will be done? †¢ When will it be done by? †¢ Who will do it? †¢ How will it be done? †¢ How will performance be measured? Budgets p. 297 †¢ Revenue forecasts/budgets. †¢ Cost budgets. Projected profit. Marketing implementation p. 297 †¢ A process that turns marketing strategies into marketing actions. †¢ Successful strategy implementation depends on several key elements. These are: o an action program that pulls people and activities together o the firm’s formal organisational structure plays a role in implementing marketing strategy o t he firm’s decision and reward systems o the firm’s marketing strategies must fit with the firm’s organisational culture. Monitoring of action plan p. 297 Marketing control p. 297 This involves evaluating the results of the marketing strategies and plans and taking corrective action to ensure that objectives are attained. Refer to Case Example 8. 6 p. 298. Challenges to international marketing planning p. 298 †¢ Plans must be realistic! †¢ Plans must be integrated into the business or corporate hierarchy. †¢ There should be financial integration with international marketing at the business strategy level. †¢ Too much emphasis is given to ‘the plan’ document rather than the international marketing planning process. †¢ Team involvement is crucial. The role of external relationships must be acknowledged and factored into the marketing plan. A series of systematic, interrelated steps is crucial in effectively formulating and implementing international marketing strategies. Refer to International Highlight 8. 3 How to wiggle your way into new markets p. 300. Practical international marketing planning p. 299 The approach a firm takes towards international marketing planning is often a reflection of: †¢ the firm’s competitive position in the local market †¢ the history of the firm †¢ the relative importance of the international markets. Market-based and product-based planning p. 299 There are two approaches to practical marketing planning: market-based and product/service-based. †¢ Market-based approach: o starts with an understanding of consumer needs o products are then modified or adapted to suit those consumer needs o service strategies to accompany the physical good may also need to be adapted for some international markets o this approach is most suitable when a new product is being developed or the intention is to modify or adapt an existing product o positioning is a key consideration Product/service-based approach: o this approach is most frequently encountered in practice o firms who undertake this approach take existing products and look towards international markets where the product can be sold in the same or similar functional format as that of the domestic market o this approach should be considered as a possible short-term planning approach with a view of moving towards a market-based approach a s experience in the international arena is gained. Incorporating creative insight p. 301 The international marketer is faced with the challenge of incorporating creative insight into the planning process and identifying new ways of conducting international business. There are a number of ways of encouraging creativity, including: †¢ question all key assertions and recommendations †¢ discuss the areas of planning with people who have a different perspective †¢ allow enough time when writing the marketing plan to reflect the findings and conclusions †¢ the idea or insight must be capable of being implemented. The importance of managerial aspirations p. 01 †¢ The personal aspirations, attitudes and expectations of the firm’s managing director or chief executive directly influence the direction, objectives and activities of the organisation. †¢ It is important for the marketing planner to acknowledge and understand the thoughts and strategic directions proposed by the firm’s leaders. †¢ Key decision-makers within the organisat ion and their aspirations need to be identified by the marketing planner who must then undertake his/her marketing planning activity that conforms to these aspirations. Summary p. 302 Planning and strategy for international marketing follows a series of steps and processes which are practised by most successful international marketing firms. These include a systematic and detailed analysis of the external market environment and the internal capabilities of the firm, a clear understanding of alternatives, concise, measurable and well-communicated objectives and well thought-out marketing strategies supported by time-phased action plans and resource allocation. Financial evaluation leading to forecasts and budgets form the basis for monitoring performance nd taking action to keep the business on target. Tools such as scenario planning are now being used to build flexibility into both company response and planning processes and provide a context for international marketing planning. The centrepiece of all international marketing planning should be detailed market analysis incorporating actionable market segmentation targets. Different approaches to segmentation shoul d be evaluated before a segmentation scheme is settled upon. This leads to alternative choices for market positioning in the targeted markets. An important part of planning for international markets is sales and cost forecasting, break-even and sensitivity analysis and a thorough evaluation of the financial consequences of missing sales targets. The many practical issues to be considered in international marketing planning include the implementation of action plans, the management aspirations of the company, the extent to which the plan can be market based as distinct from product based and the integration of the plan with the rest of the business and its competencies.