The international expansion of a company must be a choice, not simply an opportunity.

1. 1
International and
strategic marketing
for SMEs
Cairo, Egypt
May 21st, 2014

2. 2
Before we start…
• These slides support front lessons and are
part of a wider teaching program. Without
teacher explanation, arguments can be partial
and drive to incorrect conclusions.
!
• For any further needs or clarifications, please
send an email to:
alessandro.barulli@gmail.com

3. 3
Notes
• In the text terms such as client and
consumer are considered synonymous, even
if the first refers to a B-2-B (Business to
Business) relationship and the second to a
B-2-C (Business to Consumer) one.
!
• Either terms like product and service can be
considered synonymous.

4. 4
Notes
Acronyms:
•Foreign Direct Investments: FDI
•Human resources: HR
•Joint venture: JV
•Marketing: Mktg, mktg
•Market: Mkt, mkt
•Multi National Companies: MNCs
•Research and development: R&D
•Small Medium Enterprises: SMEs
•Wholly Foreign Owned Enterprises: WFOE

5. 5
Pay attention!!!!

6. 6
Internationalization is a
strategic choice, not an
opportunity

7. 7
What does it mean
going international or
global?

8. 8
It means you need…
A new business mentality

9. 9
It means you need…
To understand the
importance of strategy

10. 10
It means you need…
To prepare, fix, organize
your company

11. 11
It means you need…
To deliver a value - not
only products - to markets

12. 12
It means you need…
To discover what’s new in
the world

13. 13
Doing
business
techniques S
Export
Management
Export
Readiness
T
R
A
T
E
G
Y
Marketing
Mix
EXPORT

14. 14
What’s new in the
World?

15. 15
A new World
• Events that changed face to the international
commerce in the last 15 years:
• Economical and political union within
Countries
• New big players (China, India)
• New aggressive emerging markets:
– BRICS: Brasile, Russia, India, Cina, Sud Africa
– MIST: Messico, Indonesia, South Korea, Turchia

16. 16
A new World
• Internet’s diffusion
• Globalization of markets, both for selling and
sourcing
• €uro zone birth
• 2008/2009 global economical and financial
crisis and mkt recession

17. 17
A new World: the WWW
• More information
• Increased visibility for companies and products
• Search engine
• New communication systems (Email, Skype,
WeTransfer, YouTube, etc.)
• Social Networks (Facebook, Twitter, Google+,
Linkedin, Pinterest, Instagram, etc.)
• Online sales

18. 18
Mkt globalization
• More competition > require the switch from
company product oriented to market oriented
• More opportunities > the World is seen a
unique potential mkt
• Foreign mkts used for sourcing
• More transparency
• Impossible to compete without strategies

19. 19
A new World: challenges
• Companies are required to become market
oriented, instead of being product oriented
• Strategies definition and execution
• HR with dedicated skills to drive the
international business

20. 20
About strategy

21. 21
Marketing and strategy
What is your company’s marketing strategy?
Do you have a strategy for pricing and distribution?
Do you plan to reach customers in a foreign country?
Are you scheduling an advertising campaign for a
soon-to-be-released new product?
!
These are important questions because every
business needs a marketing strategy

22. Clients
Markets
Products
Place (distribution)
Prices
Promotion (& advertising)
Processes
Human Resources
Marketing
22
Marketing? Is everything

23. Strategic MKTG: Analysis and
forecast of market needs
! •Needs analysis
•Market segmentation and
segment choice
•Attractiveness Analysis
•Competitiveness Analysis
•New products strategy
•New markets access strategy
!!
Operative MKTG: Ensemble of
sale instruments
!•MKTG plans
•MKTG budget
•Plans application & control
•Sales tools (catalogs, price
lists)
•Web site
•Advertising
•Promotion
•Trade shows
23
Marketing

24. 24
If you’re mkt oriented
you can answer the
following questions
(according to P. Drucker)

25. 25
Are you mkt oriented?
•What is our business?
•Who is our client?
•What is valuable for our client?
•How should be our company?
•How will be our business in the future?
•Who are our competitors?

26. Access path Knowledge path
Distributors Competitors
CLIENTS
Company
Social and Economical
Environment
26
Market structure

27. 27
What do you need to
write a strategy?

28. 28
You need…
• Data and market info to build up your
Marketing Information System
• Marketing research
• Marketing/Business Planning

29. Information
(M.I.S.)
Clients
- Expectations
- Purchase intentions
- Purchase behaviors
- Behaviors after purchase
Competitors
- Positioning
- Strengths /weaknesses
- Mktg strategies & politics
Demand
- sector/market
- type of client
Company internal environment
- Marketing activity
- Marketing vs. other activities
- Revenues / mark ups
- Market share
Market external context
- Social elements
- Technological elements
- Cultural aspects
29
Marketing Information System

30. 30
Marketing research: why?
• Define the characteristics of a market
• Measure the attractiveness of a market
• Analyze sector developments
• Analyze competitors products/brands
• Study the acceptance of new products
• Study the price the market wish to pay
• Analyze clients/consumers behavior

31. 31
Marketing plan
• Is the document containing the company’s
marketing strategy. It is based on a clear
company mission, objectives and goals other
than effective controls.
• The marketing plan has to be coherent with
segmentation, positioning and marketing mix
politics.

32. Company’s Mission
Internal environment
Analysis
Goals
External environment
Strategy
Programs & Schedule
Improvements
Controls
Analysis
32
Marketing plan: basic structure

33. 33
Do your homework
S
!
Strengths
W
!
Weaknesses
O
!
Opportunities
T
!
Threats
Internal
(the company)
External
(the market)
SWOT Analysis

34. 34
Do we have to use
canvas or business
models to plan?

35. 35
Use whatever you
prefer, but start planning
asap

36. 36
The bases: segmentation
and positioning

37. 37
Defining Mkt segments
• Select product
• Select market
• Qualify prospective markets
• Determine worthwhile target markets
• Profile and prioritize segments

38. Air
Land
Sea
On wheels
By rail
Local
International
Goods < > People
National
38
Market segmentation: transports

39. Undifferentiated
Market
MKTG
Mix
MKTG
Mix A
MKTG
Mix B
MKTG
Mix C
Differentiated
Segment A
Segment B
Segment C
MKTG
Mix
Concentrated
Segment A
Segment B
Segment C
39
Segmentation & Strategies (P. Kotler)

40. 40
Positioning
• States as the product is positioned in consumers’
mind, with reference to all the different choices
they feel available to satisfy a need.
!
• The company has to offer a product:
– Matching the expectations of the target(s)
– Different from that of competitors
– With a well known and unforgettable brand

41. 41
What’s the purpose of
writing a strategy?

42. 42
To reach your customers’
satisfaction, create a
relationship with them
and get profits from it

43. Customer
satisfaction
Competitively
Satisfy the clients better
and more than the
competitors
Timely
Satisfy the clients when
they have a need, not
before (when they don’t
feel it), nor after (when the
need has been satisfied by a
competitor).
Continuously
Customer satisfaction is a
never ending attitude:
Is much better and profitable
maintain a client than get
a new one
Knowledge
of the
Market
43
Client satisfaction: the road map

44. 44
What about the
marketing mix for your
international business?

45. Domestic
Market
Global Product
Foreign
Market #1
Mercato Straniero
Mercato
2
Straniero 3
Domestic Product
Same Product
Adapted Product
Customized Product
45
Product to export: strategies

46. 46
Pricing: objectives
• Return on sales (ROS)
• Return on investments (ROI)
• Increase the market share
• Maintain the leadership towards other
manufacturers
• Sell other products of the range
• Survive to possible cash flow crisis

47. 47
Pricing: issues
• To price effectively consider the following issues:
– Price should reflect
• Strategic objectives
• Customer target
• Product positioning
– Price should take costs into account, noting that
variable cost is the floor and customer value the
ceiling
– Price should take channel considerations into account

48. Internal to the company:
- Mktg targets
- Mktg strategies
- Costs (fixed, variable,
manufacturing, packaging,
sale, promotion, etc.)
- Company organization and
structure
External to the company:
- Market characteristics
(number of clients,
purchasing capacity,
infrastructures, etc.)
- Demand
- Competitors
- Environmental aspects
(custom barriers and duties,
exchange rates, economic
conditions, restrictive rules
and laws, etc.)
Price
Decisions
48
Export pricing: major elements

49. superb
overcharging
premium penetration
average
good
cheap poor ripoff
Price
Quality
H
M
L
L
M
H
Consumer perceptions of the relationship
between product’s quality and its price
49
Pricing - quality strategies

50. Direct Importer Wholesaler Retailer
Product industrial cost 50.000 50.000 50.000 50.000
Mkup (15%) 7.500 7.500 7.500 7.500
EXW price 57.500 57.500 57.500 57.500
40’ container CIF Dubai 1.600 1.600 1.600 1.600
Duties (5%) 2.875 2.875 2.875 2.875
Transport 200 200 200 200
Price @ Importer - 62.175 62.175 62.175
Importer Mkup (50%) - 31.088 31.088 31.088
Transport - 200 200 200
Price @ Wholesaler - - 93.463 93.463
Wholesaler Mkup (20%) - - 18.693 18.693
Transport - - 200 200
Price @ Retailer - - - 112.355
Retailer Mkup (20%) - - - 22.471
Price @ End User 62.175 93.463 112.355 134.826
50
Prices & channels

51. Intensive:
Products are
distributed through
the highest number
of sale points
Selective:
Products are
distributed through
selected sale
points
(for brand, other
products, position
etc.)
Exclusive:
Products are
distributed only
in selected and
qualified sale
points
51
Distribution: types

52. 52
• Indirect
Distribution channels
– Big buyers (supermarkets, chain stores, other manufacturers).
Importers. Wholesalers. Trading companies (national &
foreign). Commissioned agents (brokers). Cooperatives.
• Direct
– Salesmen. Sales Reps. Branch. Subsidiary. Affiliated.
• Integrated
– Franchising. Contractual JVs. Piggyback (when a company
allows another one, which has its own export distribution, to
sell its products abroad).

53. Direct distribution channels
Advantages:
☺ Direct market control
☺ Own people more efficient
☺ Immediate changes on
mktg mix
☺ More info from the market
☺ Sale actions more efficient
and lasting
☺ Presence on markets
without intermediaries
☺ Brand diffusion
☺ Intermediaries mark ups
retention
53
Disadvantages:
" Very expensive initial
investment and high yearly
costs
" Need of highly skilled H.R.
" Need of a large market
share to absorb
investments and yearly
costs

54. Indirect distribution channels
Advantages:
☺ No costs and risks entering
the market
☺ No need to know market
characteristics
☺ No need to know
customers requirements
and behaviors
54
Disadvantages:
" No control on the market
" Lack of direct info from the
market
" No contact with the
endusers
" Risk of substitution from
intermediaries

55. Consumer goods
Manufacturer Import Wholesaler Retailer End user Long
Manufacturer Wholesaler Retailer End user Medium
Manufacturer End user Short
Industrial goods
55
Distribution channels: types

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Ready for take off?

57. 57
Things to do
• Preparing the company to international trade
seeking people speaking foreign languages and
possibly experienced of export sales
• Learning transport and logistic techniques in relation
with distance, infrastructures and product to ship
• Preparing sales dox (e.g. proforma and/or
commercial invoice, packing list, certificate of origin,
export license) and defining sales and distribution
contracts

58. 58
Things to do
• Acquiring info on payment terms used to settle
exchanges and guarantees used to protect export
sales
• Studying the export strategy and analyzing the most
attractive markets
• Studying the product to export, eventually adapting it
to markets needs
• Preparing sales tools (catalogues & price lists) in
foreign language(s) and measurements

59. 59
Things to do
• Training sales reps and seeking locally the
intermediaries according to the company strategic
plan
• Monitoring the market constantly for a real time
control of happenings that could affect the
commercial expansion
• Evaluating partnerships/alliances with local partners
or the opening of a corporate branch for
production and distribution

60. The risks of intl business
• Claim on goods shipped
– Different type
– Different size/color
– Damage
• Payment
– Delayed
– Not cashable
– Not executed
• Country
• Exchange rate
60
• Manufacturing
• Changes in components
– Type
– Price
• Client mistake posting the
order
• Transport
• Goods uncollected
– From customs
– From manufact. whouse

61. 61
Some tips and tricks
about Country analysis

62. Company
Strategy
Market
characteristics
Company
Size &dimensions
Competitors
Strategies
Market selection
decisions:
Simultaneously or
One-by-One
Concentrate or
Diversify
Competitors
markets selection
Market 1
Market 2
Market 3
Market 4
Market n
62
Country entry strategy

63. Intl marketing: Country Analysis (some factors)
# Custom duties
# Government
regulations
# Infrastructure and
transports
# Financial benefits for
foreign investors
# Being part of political
and/or monetary
unions
63
# GDP
# HDI
# Unemployment
# Inflation
# Economic growth
# Economic and political
stability
# Financial rating
# Families and singles
expenditure

64. Intl marketing: Country Analysis (some factors)
# Tendence to import
market/sector
# Number of
competitors
# Competitors market
share
# Mark ups
# Structure of distribution
channels
64
# Market size
# Market growth
# Number of potential
customers (prospects)
# Level of development
market/sector
# Import volume market/
sector

65. 65
Doing business with
Italians

66. 66
Business negotiation
• Good and polite manners
• Formal relationship (at the beginning)
• Shake the hands when meet each other
• When persons have a friendly relationship they
hug and kiss
• When people speak tend to reduce physical
distance (a wider distance means a cold
relationship)

67. 67
Business negotiation
• Titles count! Use “Signor” (Mr) and “Signora”
(Mrs), followed by the second name when
speaking to men and women. Use “Dottor”
and “Dottoressa” when address to people
with a degree.
• Dress to impress! Italians pay attention the
way you dress

68. 68
Business negotiation
• Establish a meeting writing day and hour
you’d like to meet your counterpart.
• Try to be punctual; a delay for is accepted for
traffic jam or other reason. In such a case,
give a phone call.
• Avoid to arrive late without informing.
• Avoid to continuously postpone a meeting.

69. 69
Business negotiation
• General meeting business hours: in the morning
later that 9.30 am. In the afternoon later than
3.00 pm. Try to avoid setting a meeting on
Monday morning and in August.
• Business talks can be long, cause Italians will get
as much info they can; sometimes before focusing
on the topics of the meeting speeches can be
various also on arguments not strictly related.

70. 70
Business negotiation
• Exchange business cards right after formal
greetings and introduction and before starting
talks. Italians pay attention to what is written on
biz cards.
• During the negotiation Italians ask for info about
the counterpart’s company, turnover and
purchasing intentions. Usually they do not ask for
plans and strategies: they are mainly interested in
sales.

71. 71
Business negotiation
• For first orders a guaranteed or in advance
payment is often required.
• To avoid misunderstandings write together
the main points of the talks at the end of the
negotiation.
• Italians love to host people: be prepared to
continue the business talks at the restaurant.

72. 72
Business negotiation
• The best way to handle a business with Italians is to
have an office locally or at least a representative that
can be the representative on behalf of the foreign
partner.
!
• Pay attention to:
– Delivery date
– Post sale service
– Business planning
– Sales literature

73. 73
Thanks for your
attention
!
For further info:
alessandro.barulli@gmail.com