5Ps of International Business

5Ps

of

Preferences Examples

Promotion

• Some countries are known for producing a specific good (watches made in Switzerland, wine made in France).

• Goods will be more/less popular based for cultural reasons.

• Similar cultures are usually targeted first.

• The brand & product must be recognizable in the target market.

• Is the brand well known around the world?
• How much promotion is necessary to introduce & launch the product?
• Will the advertising be appropriate for the target market?
• Can technology make it easier to promote the product?

International Business

Preference

Product

Promotion Examples

• Are the preferences of the target country similar to markets where the product has already succeeded?

• Do consumers already use a comparable product?

• Will consumers recognize & appreciate the brand?

• Companies will have to alter their marketing to suit the country.

• Advertising must be effective & appropriate for the market.

• To foster demand, companies have to create awareness for their products across the world.

• Global brands are popular in many countries & cultures.

• Are the product & resources used plentiful in the home country?

• Are the product & resources used scarce in the target country?

• Does the product suit the target market?

This advertisement withdrawn after it was found to be offensive to Mexican citizens.

Price

Product Examples

Case Study

Price Examples

• Each country has different natural resources (petroleum, lumber, precious metals).

• Some goods are only available on a seasonal basis in a certain area (fruit, agriculture).

• Some products are unique to a region (New Zealand honey, Kobe beef, Quebec maple syrup, B.C. Western Red Cedar).

• The product must be usable in the target country (winter clothing in a tropical area will not fit, but sandals will).

• Companies choose to produce goods where costs are lowest.

• Costs include: raw materials, production, management, labour, shipping, taxes.

• It’s also important that the cost is similar to what competitors charge.

• Transportation, tariff & taxes will add to the price.

• Is it possible to make additional products at a reasonable cost?
• Is it cost effective to ship the product to the market?
• Are there any laws or tariffs that affect the product?
• Is the price required comparable with those charged by competitors?
• What are the costs (wages, materials) of the target country?

Canada Goose has been attempting to expand beyond North America in recent years.

5 Factors for Success in International Business

• Product
• Price
• Proximity
• Preference
• Promotion

Questions

Canada Goose is trying to grow the business outside of Canada.

Proximity Examples

• Geographic neighbours make good trading partners.

• Both partners negotiate trade agreements and maintain efficient shipping routes (U.S./Canada border crossing, shipping within Europe).

• Does Canada Goose have a suitable product to sell overseas?

• How has the international expansion gone in recent years?

• Based on the 5Ps, what would be a good country to target?

• Shipping costs & logistics may add time & expense to the product.

• Some items may go bad or become damaged if shipped far.

Global Marketplace

Proximity

• Is the target country near the home country?

• Is the culture similar to the home country?

• Can the product be shipped quickly & inexpensively?

International Business Review

All countries benefit when businesses produce specialized goods & services that appeal to consumers.

International trade provides choice: to consumers who may buy a variety of products & to businesses who can choose from diverse markets to sell their products.

Learning Goal

Explain the 5Ps required for success in International Business.