The Scope and Challenge of International Marketing

INTERNATIONAL

Global Perspective: Recent Events

Information technology boom of the late 1990s

The high-tech bust of 2001

Enron and WorldCom scandals September 11th attacks on the World Trade Center and Pentagon Wars in Afghanistan and Iraq

Global Perspective: Recent Events

International conflict among China, Taiwan, and the United States

2003 SARS outbreak in Asia

Global terrorism, e.g., Indonesia, Israel, India, and Morocco Transcending these events, international commerce continued

Global Business Trends

The rapid growth of the World Trade Organization and regional free trade areas, e.g., NAFTA and the European Union General acceptance of the free market system among developing countries in Latin America, Asia, and Eastern Europe

Impact of the Internet and other global media on the dissolution of national borders, and

Managing global environmental resources

Internationalization of U.S. Business

Increasing globalization of markets Firms face competition on all fronts

Many U.S. companies are now foreign controlled

U.S. firms seeking foreign markets to increase profits

Importance of International Marketing

Companies can no longer ignore the effects of internationally marketing. Competition no longer exists just from domestic companies. In order to sustain profitability and growth margins of the past, companies have to look for alternative methods of marketing their products and services. In a study conducted on U.S. manufacturing companies of all sizes, it was found that multinational companies outperformed their strictly domestic U.S. counterparts by more than twice as fast in sales and earned much greater returns on equity and assets.

Importance of International Marketing

Comparing Domestic and International Marketing Similarity Both carry out transactions that meet the needs of individuals and organizations. Differences International markets have greater growth potential. Some tasks associated with international marketing not included (or less intense ) than in domestic marketing (e.g., cultural research, political factors, exchange rates, trade laws, long distance distribution).

Importance of International Marketing

International and Global Marketing Multi-Country Marketing Global Marketing

International Marketing: A Definition

International and Global Marketing and Related Fields of Study

International Business
International Marketing International Trade International Management

International Finance

International Marketing: A Definition

International and Global Marketing and Related Fields of Study

International Business
International Marketing Global Marketing International Trade International Management

International Finance

International Marketing: A Definition

International Marketing was a stage in the evolution of Global Marketing

Stage 1 Domestic Marketing: Companies manufacturing products and selling those within the country itself. So, no international phenomenon at all. Stage 2 Export Marketing: Company starts exporting products to another countries also. This is the very basic stage of global marketing called ethnocentric because although he is selling goods to foreign countries, product development is totally based upon the taste of local customer. So, focus is still on domestic market Stage 3 International Marketing: Now, company starts selling products to various countries and the approach is Polycentric i.e. making different products for different countries.

International Marketing: A Definition

International Marketing was a stage in the evolution of Global Marketing

Stage 4 Multinational Marketing: The number of countries in which the company is doing business gets bigger than that in earlier stage. And so, instead of producing different goods for different countries, company tries to identify different regions for which it can deliver same product. So, same product for countries lying in one region but different from product offered in countries of another region. This approach is called Regiocentric approach Stage 5 Global Marketing: Final stage of evolution in which company really operates in a very large number of countries and for the purpose of achieving cost efficiencies it analyses the requirement and taste of customers of all the countries and come out with a single product which can satisfy the needs of all. This approach is called Geocentric approach.

Strategic Orientation: EPRG Schema

Orientation EPRG Schema

Domestic Marketing Extension

(Ethnocentric)

Multi-Domestic Marketing
Global Marketing

(Polycentric)

(Regio/Geocentric)

Strategic Orientation: EPRG Schema

Generally, four distinctive approaches dominate strategic thinking in international marketing:

1. Ethnocentric or Domestic Marketing Extension Concept:

Home country marketing practices will succeed elsewhere without adaptation; however, international marketing is viewed as secondary to domestic operations
2. Polycentric or Multi-Domestic Marketing Concept:

Opposite of ethnocentrism Management of these multinational firms place importance on international operations as a source for profits Management believes that each country is unique and allows each to develop own marketing strategies locally

Strategic Orientation: EPRG Schema

Generally, four distinctive approaches dominate strategic thinking in international marketing:

3. Regiocentric:

Sees the world as one market and develops a standardized marketing strategy for the entire world

4. Geocentric:

Regiocentric and Geocentric are synonymous with a Global Marketing Orientation where a uniform, standardized marketing strategy is used for several countries, countries in a region, or the entire world

International Marketing: A Definition

International marketing is defined as the 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

Marketing concepts, processes, and principles are universally applicable all over the world

The International Marketing Task

Foreign Environment (Uncontrollables)
7. Structure of Distribution Domestic environment (Uncontrollables) 1. Competition Environmental uncontrollable country market A

(Controllables) 1. Competition 2. Technology Price Product 5. PoliticalEnvironmental Target 7 Market Legal uncontrollable 6. Geography and country Promotion Place or 2 .Technology Infrastructure market B Distribution 4. Culture Environmental 3. Economy uncontrollable 5. Political3. Economy country Legal market C 4. Culture

Environmental Adaptation Needed

Differences are in the uncontrollable environment of international marketing Firms must adapt to uncontrollable environment of international marketing by adjusting the marketing mix (product, price, promotion, and distribution)

Continuum Local Adaptation (of Marketing Mix) Global Standardization (of Marketing Mix)

INFLUENCED BY 7 ENVIRONMENTAL FACTORS

International Strategy Choices

There are four basic strategies in which to enter and compete in the international environment. The suitable strategy for a company is based on the extent of pressure faced for global integration and local responsiveness.

International Strategy Choices

Self-Reference Criterion (SRC) and Ethnocentrism:Major Obstacles

SRC is an unconscious reference to ones own cultural values, experiences, and knowledge as a basis for decisions Ethnocentrism refers to the notion that ones own culture or company knows best how to do things Both SRC and ethnocentrism slow down the ability to assess a foreign market in its true light Reactions to meanings, values, symbols, and behavior relevant to our own culture are different from those of foreign Relying on ones SRC could produce an unsuccessful marketing program

Self-Reference Criterion (SRC) and Ethnocentrism:Major Obstacles

To illustrate the impact of the SRC, consider misunderstandings that can occur about personal space between people of different cultures. When someone is too close or too far away, we feel uncomfortable and either move further away or get closer to correct the distance we are relying on our SRC

Avoiding the Self Reference Criterion

To avoid the SRC, the following steps are suggested:

1: Define the business problem or goal in home-country cultural traits, habits, or norms 2: Define the business problem or goal in foreign-country cultural traits, habits, or norms. Make no value judgments 3: Isolate the SRC Influence in the problem and examine it carefully to see how it complicates the problem 4: Redefine the problem without the SRC influence and solve for the optimum business goal situation*

Developing a Global Awareness

To be globally aware is to have:
1. Tolerant of Cultural Differences, and

2. Knowledgeable of: (a) Culture, (b) History, (c) World Market Potential, (d) Global Economic, Social and Political Trends

Stages of International Marketing Involvement

In general, firms go through five different phases in going international: No Direct Foreign Marketing Infrequent Foreign Marketing Regular Foreign Marketing International Marketing Global Marketing

Stages of Int. Mark. Involvement

No Direct Foreign Marketing Company does not actively pursue customers in foreign markets, but receives them through unintended channels - Products are
bought abroad through domestic wholesalers/distributors, website on the internet

Infrequent Foreign Marketing Company sells to foreign markets only when a temporary surplus of product exists. Once surplus is gone, foreign activity is gone.
Regular Foreign Marketing Companies produce their products and services to primarily sell domestically, but also internationally Through domestic/foreign
middlemen, sales force in foreign countries

Stages of Int. Mark. Involvement

International Marketing Companies are fully engaged in international marketing strategies Companies are now international or multi-national Global Marketing Change from its marketing activities to all activities focused in a global perspective. In most cases companies sales revenues are more than of its
total revenues Treat the world as one market Market segment is no longer focused on national borders, rather such things as income levels, usage patterns, or other factors are looked across borders