Marketing Mix: Promotional and Distribution Decisions

The promotional decisions facing the international marketer can generally be subdivided into mass communication (advertising) and interpersonal communication (personal selling and sales management). Multinational enterprises use both of these methods.

Mass communication messages are traditionally broadcast to the people at large, who are the ultimate consumers in terms of marketing. Advertising is directed at generating demand from ultimate consumers. This is known as a "pull" strategy.

Advertising management is usually divided into three problem areas. The first is how much to spend to stimulate demand (the budgeting problem), and the second is which media to direct the firm's message (the media-selection problem). The third problem concerns what the message is and how it should be formulated.

One common approach to advertising budgeting is to spend a certain percentage of last year's sales. The sales generated will pay for future spending. Many multinational companies with standardized promotional messages cut advertising budget by providing local subsidiaries with various advertising materials.

The problem of media selection depends on the degree to which the selected target market can be reached by a chosen media source. In general, the media selection is country specific and must be performed with the help of local advertising agencies. Several large advertising agencies in high-income countries service their multinational clients and promote their firm-specific advantages. Such agencies combine the latest marketing techniques with deep knowledge of the

tools necessary to be successful in the local markets. These agencies can provide market research on demand conditions and market segments in the host country.

The most important and interesting question in overseas advertising relates to the message. What should be said? How should it be said? By whom should it be said? These are choices that require familiarity with the local market Brand and company names that are well known throughout the world markets speak for themselves (Coca-Cola, Sony, or Honda). In the case of slogans some adaptation to local country markets is necessary. The spokesperson chosen for a product also requires a careful adaptation to local environment since he or she need to be known to the local people.

Personal selling problems are country specific and product specific. The firm's salespersons should all have some knowledge of a host country's people, their language and culture. The importance of salespeople is an integral part of the firm's "push" strategy. The best salespersons for a firm are host-country natives. Such sales objectives as to provide after-sale service, spare parts for the product sold, or to generate new orders from existing customers, etc. can be achieved by standardized and repetitive calls by a native salesperson.

International distribution decisions fall into two categories. These are those decisions which concern the physical handling of the product ( the physical transportation or physical distribution decisions) and those decisions which have to do with managing the product through the channel of distribution from the producer to the ultimate buyer (the channel management decisions).

The physical distribution refers to loading/unloading, shipment, warehousing, delivery, etc. and is considered to be the cornerstone of international trade. Nevertheless, it is the channel management decisions that are most important for international marketing. Entering the foreign market and developing trade relations with the firms performing the physical handling of the product leads to the question of channel management. The MNE must ensure a reliable distribution channel from production to the ultimate buyers. There are several approaches to this. They include intensive personal preparation, visits to potential distributors in the host country, training programs for local channel representatives, direct investment in a local sales office.

Smaller companies and larger companies in smaller markets usually work with independent distributors responsible for organizing and implementing the marketing of the product in the host country. Many large MNEs open their own sales subsidiaries (branches or offices). Such a sales subsidiary heeds to be staffed with host-country nationals in addition to expatriates. The most common arrangement is for top management of the subsidiary to consist of home-country expatriates and all channel activities to be handled by local people. The main role of the expatriate is often to transmit headquarters directives to the domestic staff who directly contact with the local buyers. The major tasks of the sales subsidiary include organizing the promotional campaigns and the provision of support to sales representatives. The basis for efficient performance of the sales subsidiary is the consistency of supplies from the home country.