Chapter 1: TheScope and Challenge of

International Marketing
GLOBAL PERSPECTIVE: GLOBAL
COMMERCE CAUSES PEACE
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
EVENTS AND TRENDS
AFFECTING GLOBAL BUSINESS
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 growing impact of the Internet, mobile phones, and
other global media on the dissolution of national borders
mandate to properly manage the resources and global
environment for the generations to come.
 1-4

THE INTERNATIONALIZATION
OF U.S. BUSINESS
Increasing globalization of markets
Increasing number of U.S. companies are foreign
controlled
$23.4 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
FOREIGN ACQUISITIONS
OF U.S. COMPANIES

1-5
 1-6

SELECTED U.S. COMPANIES

AND THEIR INTERNATIONAL SALES
 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
 International Marketing: A Definition

Apparently Minor difference, in more than one country,

What is the difference between domestic and international

marketing?

Foreign marketing comes from the range of unfamiliar

problems and the variety of strategies necessary to cope with
different levels of uncertainty encountered in foreign markets.
 International Marketing: A Definition

Uncertainty:
Competition
legal restraints
government controls
Weather
fickle consumers
other uncontrollable elements can frequently do, affect the
profitable outcome of good, sound marketing plans.

Marketer cannot control or influence these uncontrollable

elements but adjust them in a manner that results successful
outcome.
McGraw-Hill/Irwin 2005 The McGraw-Hill Companies, Inc. All rights reserved.
 The International Marketing Task
Foreign Environment
(Uncontrollables)
7. Structure of 1. Competition
Distribution Domestic environment Environmental
(Uncontrollables) uncontrollables
country market A
(Controllables) 1. Competition
Price Product 2. Technology
5. Political- Target Environmental
Legal Market 7 uncontrollables
6. Geography and
Infrastructure Promotion Place or 2 .Technology country
Distribution market B
4.
Culture Environmental
3. Economy
uncontrollables
5. Political- 3. 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
Adaptation Standardization
(of Marketing Mix) (of Marketing Mix)
INFLUENCED BY 7 ENVIRONMENTAL FACTORS
 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 the SRC and ethnocentrism impede 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
 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
 No Direct Foreign Marketing

Products reach foreign markets indirectly

Trading companies
Foreign customers who contact firm

Wholesalers

Distributors

Web sites

Foreign orders stimulate a companys interest to seek

additional international sales
 Infrequent Foreign Marketing

Caused by temporary surpluses

Variations in production levels
Increases in demand

Firm has little or no intention of maintaining

continuous market representation
Foreignsales decline when demand or surplus decreases
May withdraw from international markets

Little or no change in company organization or product

lines
 Regular Foreign Marketing

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
 International Marketing

Fully committed to and involved in international

marketing activities.
Not only the marketing but also the production of goods
outside the home market
Company becomes an international or multinational
marketing firm.
 Global Marketing

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
 Strategic Orientation

Domestic market extension orientation

Multidomestic market orientation

Global market orientation

 Domestic market extension orientation

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
 Multidomestic market orientation

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
 Global market orientation

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