LECTURE 1 Part 1 The Scope and Challenge of International Marketing Chp1

The

changing face of U.S. business The scope of the international marketing task The importance of the self-reference criterion (SRC) in international marketing The progression of becoming a global marketer The increasing importance of global awareness

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 Global

commerce during peace time

Commercial aircraft and space vehicle industries Mobile phone industry Individuals and small companies

International

markets are ultimately unpredictable

Flexibility means survival

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The rapid growth of the World Trade Organization and regional free trade areas The trend toward the acceptance of the free market system among developing countries in Latin America, Asia, and Eastern Europe The burgeoning impact of the Internet, mobile phones, and other global media on the dissolution of national borders The mandate to properly manage the resources and global environment for the generations to come
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 Increasing

globalization of markets Increasing number of U.S. companies are foreign controlled

$16.3 trillion in foreign investment in the U.S. $2.6 trillion more than American overseas investment

Increasing

number of foreign companies building and buying manufacturing plants in the U.S. Increasing difficulty for domestic markets to sustain customary rates of growth
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Exhibit 1.1

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Exhibit 1.2

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 Performance

of business activities designed

to

Plan Price Promote, and Direct the flow of a companys goods and services to consumers or users in more than one nation for a profit

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Exhibit 1.3

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 Ability

to effectively interpret the influence and impact of the culture in which you hope to do business

Cultural adjustments

Establish Avoid

a frame of reference

measuring and assessing markets against the fixed values and assumptions of your own culture

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 The

key to successful international marketing is adaptation to the environmental differences from one market to another Primary obstacles to success in international marketing

SRC Associated ethnocentrism

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 SRC

is an unconscious reference to
of the SRC

Ones own cultural values, experiences, and knowledge as a basis for decisions

Dangers

Failing to recognize the need to take action Discounting the cultural differences that exist among countries Reacting to a situation in an offensive to your hosts
Notion that ones own culture or company knows best
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Ethnocentrism

 Ethnocentrism

and the SRC can influence an evaluation of the appropriateness of a domestically designed marketing mix for a foreign market The most effective way to control the influence of ethnocentrism and the SRC is to recognize their effects on our behavior

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1.

Define business problem or goal

Home-country vs. foreign-country cultural traits, habits, or norms Consultation with natives of the target country

2. 3.

Make no value judgments Isolate the SRC influence

4.

Redefine the problem

Examine it carefully to see how it complicates the problem Without SRC influence Solve for the optimum business goal situation
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 Tolerance

of cultural differences:

Understanding cultural differences and accepting and working with others whose behavior may be different from yours

Knowledge

of cultures, history, world market potential, and global economic, social, and political trends

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 Select

individual managers specifically for their demonstrated global awareness Develop personal relationships in other countries Have a culturally diverse senior executive staff or board of directors

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 No

direct foreign marketing Infrequent foreign marketing Regular foreign marketing International marketing Global marketing

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 Products

reach foreign markets indirectly

Trading companies Foreign customers who contact firm Wholesalers Distributors Web sites

Foreign

orders pique a companys interest to seek additional international sales

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 Caused

by temporary surpluses

Variations in production levels Increases in demand

Firm

has little or no intention of maintaining continuous market representation

Foreign sales decline when demand or surplus decreases May withdraw from international markets

Little

or no change in company organization or product lines

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 Firm

has production capacity devoted to foreign markets Firm employs domestic or foreign intermediaries

Uses its own sales force Sales subsidiaries in important markets

Products

allocated or adapted to foreign markets as demand grows Firm depends on profits from foreign markets

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 Company

treats world, including home market as one market Market segmentation decisions no longer focused on national borders

Defined by income levels, usage patterns, or other factors

More

than half of revenues come from abroad Organization takes on global perspective

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 Domestic

market extension orientation Multidomestic market orientation Global market orientation

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 International

operations viewed as secondary Prime motive is to market excess domestic production Firms orientation remains basically domestic Minimal efforts are made to adapt product or marketing mix to foreign markets Firms with this approach are classified as ethnocentric

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 Companies

have a strong sense that foreign country markets are vastly different Market success requires an almost independent program for each country

Separate marketing strategies Subsidiaries operate independently of one another in establishing marketing objectives and plans Products are adapted for each market

Control

is decentralized

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 Company

guided by global marketing orientation

Marketing activity is global Market coverage is the world

Firm

develops a standardized marketing mix applicable across national boundaries

Markets are still segmented Each country or region is considered side by side with a variety of other segmentation variables Fits the regiocentric or geocentric classifications

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 An

environmental/cultural approach to international strategic marketing Intended to demonstrate the unique problems of international marketing Discussion of international marketing ranges from the marketing and business practices of small exporters to the practices of global companies

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Exhibit 1.4

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 The

internationalization of American business is proceeding with increasing pace The globalization of markets and competition necessitates all managers to pay attention to the global environment International marketing is defined as the performance of business activities across national borders

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 Environmental

differences must be taken into account if firms are to market products and services at a profit in other countries

Laws Customs Cultures

Self-reference

criteria and ethnocentrism limit international marketers abilities to understand and adapt to differences prevalent in foreign markets

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 Solutions

to SLC and ethnocentrism

Global awareness Sensitivity

Strategic

orientations found among managers of international marketing operations

Domestic market extension orientation Multidomestic market orientation Global market orientation

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