Lecture 12: Ch. 17–18 | Int'l Marketing-MKTG 335-G | Chad Jardine, Utah Valley University, 2015–2017

International Marketing: MKTG 335-G
Course copyright © Chad Jardine. Images, works cited, etc. are copyright © their respective owners.
International Marketing
MKTG 335-G

McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Personal Selling
and Sales Management
Chapter 17

Takeaways: Chapter 17
What You Need to Know:
• Characteristics of international sales teams.
• Compensation issues
• What makes a good international salesperson

Marketing and Sales Personnel
Expatriates:
Relocate a
salesperson
from the home
country.
Virtual
Expatriates:
Telecommuting
salesperson
from the home
country.
Local National:
Hire a
salesperson
from the target
country
Third-Country
National:
Hire a salesperson
from another
country with
related experience.

Information-oriented cultures like Germany may be more
appropriate for using expatriates.
Designing the Salesforce

Relationship-oriented cultures like Japan require the in-
depth local knowledge of natives.
Designing the Salesforce

Expatriates
• Difficult to uproot families for a two- or three-
year assignment
• increasing numbers of dual career couples
often require finding suitable jobs for spouses
• many executives believe such assignments
impede their subsequent promotions at home

Local Nationals
• Historically, companies prefer expatriates, but
this is changing in favor of local nationals.
• Local nationals typically cost less.
• Headquarters tends to discount the advice of
local nationals.
• Influence is restricted by limited language
skills and understanding of home office
politics.
• Distance creates real barriers to
communication and participation in strategy.

Host country restrictions may impact who and from where
you can hire salespeople.

Concerns about foreign corporate domination, local unemployment,
and other issues cause some countries to restrict the number of
non-nationals allowed to work

Most countries have specific immigration rules, including the U.S.,
controlling the number of foreigners allowed to work or train within
their borders

In the past, personnel gained foreign-country experience by being
sent to lower management positions to get the training before
assuming top-level foreign assignments

1-‹#›
 
Selecting Sales and Marketing Personnel 
▪ In addition to descriptions for each marketing position, a transnational management position
can require special skills and attitudes:
• Maturity is a prime requisite for expatriate and third-country personnel
• International personnel require a kind of emotional stability not demanded in domestic sales positions
• Managers or salespeople operating in foreign countries need considerable breadth of knowledge of
many subjects both on and off the job. The ability to speak one or more other languages is always
preferable
• The marketer who expects to be effective in the international marketplace needs to have a positive
outlook on an international assignment
• An international salesperson must have a high level of flexibility, whether working in a foreign
country or at home
• Cultural empathy is clearly a part of the basic orientation, because anyone who is antagonistic or confused about the
environment is unlikely to be effective
• Finally, international sales and marketing personnel must be energetic and enjoy travel

1-‹#›
 
Developing Cultural Awareness 
▪ People with cultural skills can:
• Communicate respect and convey verbally and nonverbally a positive regard and sincere interest in people and
their culture.
• Tolerate ambiguity and cope with cultural differences and the frustration that frequently develops when things
are different and circumstances change.
• Display empathy by understanding other people’s needs and differences from their point of view
• Remain nonjudgmental about the behavior of others, particularly with reference to their own value standards.
• Recognize and control the SRC, that is, recognize their own culture and values as an influence on their
perceptions, evaluations, and judgment in a situation.
• Laugh things off—a good sense of humor helps when frustration levels rise and things do not work as planned.

1-‹#›
Designing Compensation Systems: For a
Global Salesforce
▪ Among multinational companies about half describe their sales
compensation plans as global in nature and the other half as
local
▪ Compensation plans of American companies vary substantially
around the globe, reflecting the economic, legal, and cultural
differences

McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Pricing for International Markets
Chapter 18

Quote of the Week
“The moment you make a mistake
in pricing, you’re eating into your
reputation or your profits.”
—Katie Paine
CMO, News Group

Takeaways: Chapter 18
What You Need to Know:
• Components of pricing as competitive tools in international
marketing
• How to control pricing in parallel import or gray markets
• Price escalation and how to minimize its effect
• Counter trading and its place in international marketing
practices
• The mechanics of price quotations
• The mechanics of getting paid

International Pricing
Setting and changing prices are key strategic marketing decisions

Prices both set values and communicate in international markets, they
must reflect the quality and value the consumer perceives in the
product

The country in which business is being conducted, the type of product,
variations in competitive conditions, and other strategic factors affect
pricing activity

Pricing Policy
In setting a price in international markets, different tariffs, costs,
attitudes, competition, currency fluctuations, and methods of price
quotation need to be taken into account

Pricing Policy
Active marketing in several countries compounds the variables relating
to price policy

Pricing Objectives
The more control a company has over the final price of a product,
the better it is able to achieve its marketing goals, but it is not
always possible to control end prices

Pricing Objectives
Broader product lines and more countries involved make
the process of controlling prices charged to the end user
the more complex.

Parallel Importation or Gray Markets
The possibility of a parallel market occurs whenever price
differences are greater than the cost of transportation
between two markets

For example, the ulcer drug Losec sells for only $18 in Spain
but goes for $39 in Germany; and the heart drug Plavix costs
$55 in France and sells for $79 in London.

An intermediary can buy products where they are less
expensive and sell it in countries where the price is higher
and make a profit.

Exclusive distribution, designed to maintain high retail margins encourage
retailers to stock large assortments, or to maintain the exclusive-quality
image of a product, can create a favorable condition for parallel importing

Pricing Unit Economics
Understanding fixed, variable and full costs

Full-Cost Pricing: Each unit of a similar product sold must bear its full
share of the total fixed and variable cost.

Variable-Cost Pricing: firms regard foreign sales as bonus sales. They
ignore fixed costs and view any return over their variable cost as a
contribution to net profit

Price Sensitivity (or Elasticity of demand): is how sensitive buyers
are to price. For example, buyers are typically less sensitive to price
when purchasing luxury goods.

Pricing strategy typically falls on a spectrum from skimming
on one hand to penetration pricing on the other.

Skimming is used to reach a segment of the market that is
relatively price insensitive and thus willing to pay a premium
price for a product.

Penetration strategy is used to stimulate market growth and
capture market share by deliberately offering products at low
prices.

Price Escalation
Price escalation refers to the added costs
incurred as a result of exporting products from
one country to another
38

Dumping
WTO rules allow for the imposition of a duty when goods
are dumped.

Dumping
A countervailing duty or minimum access volume (MAV), restricting
the amount a country will import, may be imposed on foreign goods
benefiting from subsidies.

Dumping
One approach classifies international shipments as dumped if the
products are sold below their cost of production.

Dumping
The other approach characterizes dumping as selling goods in a
foreign market below the price of the same goods in the home market.

1-‹#›
Leasing as a Pricing Tool
▪ Leasing opens the door to a large segment of nominally
financed foreign firms that can be sold on a lease option but
might be unable to buy for cash
▪ Leasing can ease the problems of selling new, experimental
equipment, because less risk is involved for the users
▪ Leasing helps guarantee better maintenance and service on
overseas equipment
▪ Equipment leased and in use helps sell other companies in that
country
▪ Lease revenue tends to be more stable over a period of time
than direct sales would be

Countertrade as a Pricing Tool
Countertrade is a pricing tool that every
international marketer must be ready to employ
44

Diamond Cartel
A cartel exists when companies producing similar products work
together to control markets for the types of goods they produce

Lecture 12: Ch. 17–18 | Int'l Marketing-MKTG 335-G | Chad Jardine, Utah Valley University, 2015–2017

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Lecture 12: Ch. 17–18 | Int'l Marketing-MKTG 335-G | Chad Jardine, Utah Valley University, 2015–2017