International marketing strategies

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Graphic design of the series Jarosław Tomaszewski. Cover illustration Paweł Rosołek. Editor Ewa Kosińska. Technical editor Jolanta Czapska. Revision Teresa ...

without secrets Polish Economic Publishing House

Paweł Pietrasieński

International marketing strategies

"A marketing strategy is a series of integrated activities leading to the difficult competitive advantage

"A marketing strategy is a series of integrated activities leading to the difficult competitive advantage John Scully

Polish Economic Publishing House, Warsaw 2005

Polish Economic Publishing House

Paweł Pietrasieński

International marketing strategies

Reviewer

Prof. Assoc. Ireneusz Rutkowski Graphic design of the series Jarosław Tomaszewski Cover illustration Paweł Rosołek Editor Ewa Kosińska Technical editor Jolanta Czapska Revision Teresa Pąk

© Copyright by Polish Economic Publishing House S.A. Warsaw 2005

ISBN 83-208-1597-5

Polish Economic Publishing House S.A. ul. Canaletta 4, 00-099 Warsaw tel. (headquarters) (0-22) 827 80 01. fax 827 55 67 e-mail: [email protected] http://www.pwe.com.pl Typesetting: A. Ćwil, Warsaw, tel. (0-22) 644 99 55 Print and binding: Zakłady Graficzne KEN SA, Brzoza n. Bydgoszcz

Contents

Introduction / 9

Part I: Ways of internationalization of business activities / 13 Section 1 The essence of internationalization of business activities / 15 Aspect of internationalization / 15 Benefits and limitations of transferring production to other countries / 16 How to measure the degree of internationalization? / 20 Section 2 How internationalize the activities of the company? / 24 "Globalists after years" / 24 "Natural-born globalists" / 27 Preparing to enter foreign markets / 30 Section 3 Methods of enterprises entering foreign markets / 33 Entry based on product exports / 33 Contractual entry methods / 35

6 Contents

Methods of entry based on cooperation / 38 Direct foreign investments / 40 Commitment of resources in international operations and their control / 43

Part II: Construction of marketing strategies on the international market / 47 Section 4 The essence of international marketing strategies / 49 What makes marketing strategies? / 49 Types of standardization and individualization of marketing strategies / 51 Section 5 International business orientation / 53 How businesses are oriented on the international market? / 53 International orientations and types of marketing strategies / 58 Section 6 The benefits of standardization and individualization of international marketing strategies / 64 Cost motives for the standardization of international marketing strategies / 64 Additional benefits of standardization of international marketing strategies / 66 Benefits of individualization of international marketing strategies / 68 Section 7 Susceptibility of marketing instruments to standardization and individualization / 71 Susceptibility of product to standardization and individualization /

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Contents 7

Possibilities of standardization and individualization of other marketing instruments / 75 Section 8 Scope of standardization and individualization of company marketing strategies / 78 Environmental factors shaping the range of standardization and individualization / 78 Standardization and individualization and international competitive moves / 84 Scope of standardization and the centralization of marketing decision-making / 88

Part III: Creation of marketing instruments in the international market / 91 Section 9 International product policy / 93 Modular and base approach to product standardization / 93 Strategies for internationalization of products / 95 How to use the effect of the country of origin? / 101 The importance of the brand in the international product policy / 103 Section 10 Global sales activation policy / 107 Standardize or individualize the advertising policy? / 107 Public relations and sponsorship in the international market / 114 Sales promotion and personal sales - an example of an individualized policy / 116 Section 11 International pricing and distribution policy / 119 Issues in the international price policy / 119 Distribution policy in the international market / 122

8 Conten ts

Section 12 Marketing issues of businesses in the EU Single Market / 126 Should 'Community' marketing strategies be standardized or individualized? / 126 Creation of marketing instruments for the Single Market / 130 Conclusions for Polish companies / 135 Glossary / 139 Selected bibliography / 147

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Introduction

In view of the increasing globalization of markets and competition, companies are increasingly forced to seek new buyers for their products outside their own countries. Those companies that do not may face lost opportunities and the inevitable assault by foreign competitors on their market. The issue of the book focuses on the marketing activities of those companies that have already expanded into foreign markets, as well as those that are planning such activities. The aim of the book is to introduce the methods for the internationalization of business activities and to present ways of solving the problems that arise with each entry into foreign markets. The fundamental issue boils down to the question of how to effectively develop marketing strategies in the international market. Therefore, a strong emphasis has been placed on the ways companies focus on the market and the marketing strategies resulting from that orientation. If a company uses marketing in the international dimension, the fundamental dilemma is to choose between standardization and individualization of its marketing strategy. The source of reaching a competitive advantage on a global scale is the company’s ability to effectively shape the ranges of standardization and individualization of respective instruments of international marketing.

10 Introduction

This book will answer the reader's most important questions - from the point of view of the internationalization of business - related to the methods companies use while entering foreign markets (how to enter?), the speed of internationalization ("natural-born globalists" and "globalists after years"), the ways of shaping marketing strategies on the international market (whether to standardize or to differentiate marketing tools). The book can also serve as a sort of a "road map" for Polish companies planning to expand into foreign markets, including the EU Single Market, which is particularly attractive when it comes to the first phas es of their internationalization. The process of integrating the European Union, whose most prominent example is the common commercial policy, creates conditions for the unification of marketing activities of companies. However, the still significant differences in cultural and legal conditions between EU Member States tend to an individualized approach. The book presents ways to shape international policy of marketing instruments, taking into consideration both these approaches. Although one may state the general accord that the integration of Europe has strengthened the trend towards standardization of these strategies, a discussion still rages on as to the scope of these changes and the importance of alternative ways of doing business in the EU market. As long as at the political debate regards the selection of integration solutions that fall within the ideas the "united states of Europe" on the one hand, and the "Europe of nations" on the other, the micro level will see a clash between the views of treating the European Union as one, relatively unified area of business activity, and those treating it as a set of 25 national markets. The search for the right balance between Europeanism and localism boils down to decisions regarding the standardization and individualization of "Community" marketing

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Introduction 11

strategies. More and more often there is talk of the renaissance of local sentiment in Europe, and as a result - of the increasing importance of cultural and national factors in marketing strategies. Polish businesses are no exception. Operating in the common European environment, they are subject to the same competitive, market, economic, legal and political determinants, as their competitors from Western Europe. For these reasons, it is difficult to find examples of marketing strategies that significantly made the procedures in Polish enterprises stand out from among the activities undertaken by companies from other EU member states. The analysis of international marketing strategies t herefore applies to all companies operating in the global economy. The final conclusions, however, have been formulated taking into account the internationalization paths most frequently used by the Polish companies. The book is primarily addressed to seni or managers and middle managers in enterprises running or planning activities in the international market, entrepreneurs looking for ways to extend the reach of their business activities, as well as those studying the issues of international marketing. The conclusions contained herein may also be useful to decision-makers responsible for the creation of foreign economic policies of the country, including the creation of favorable legal and political conditions for the internationalization of Polish enterpri ses.

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