• International Marketing

Understand the importance of international

marketing

Appreciate the opportunities and challenges

offered by international marketing

Recognize the effect of the global environment

on international marketing activities

Understand the process of market selection

Recognize the process of internationalization.

Appreciate the different forms of market entry

Comprehend the international adjustment of

the marketing mix

Understand the steps necessary for the

implementation of an international marketing
strategy
WHAT INTERNATIONAL MARKETING
IS:

• International marketing is the process of

planning and conducting transactions
across national borders to create
exchanges that satisfy the objectives of
individuals and organizations.
PLANNING FOR INTERNATIONAL
MARKETING

• How will my product fit into the

international market?
• What marketing adjustments are or will
be necessary?
• What threats from global competition
should I expect?
• How can these threats be turned into
opportunities?
 Top 25 Multinational Firms

• TABLE 3.1
 Opportunities

• TABLE 3.1
• Integrate global
knowledge
• Expand long-run
production
• Lengthen and
rejuvenate product
life cycles
THE INTERNATIONAL MARKETING
ENVIRONMENT

• Cultural Environment
• Socioeconomic Environment
• Legal and Political Environment
 THE INTERNATIONAL MARKETING
ENVIRONMENT

• International marketer
Cultural surveys:
Environment  Depth of traditional
beliefs and attitudes
and dominant
cultural elements
Socioeconomic  Power of opinion
leaders and change
Environment agents
 Communication
from different
media
Political/Legal
 Cultural Environment

• Four Dimensions of Culture

 Degree of Individualism
 Level of Equality
 Uncertainty Avoidance
 Material Achievement
 Four Dimensions of Culture

Cultural
Environment
 Socioeconomic Environment

• Population
 Age Distribution
 Income
 Infrastructure
 Socioeconomic Environment

• Population and its

Cultural characteristics
Environment Aging of world
populations for
example
Socioeconomic • Economic
Environment Integration
NAFTA, EU,
MERCOSUR

Political/Legal
 Socioeconomic Environment

Cultural • Elderly population

Environment boom changes U.S.
market
characteristics

Socioeconomic

Growth Rate
3.5

Environment 3
2.5
2
1.5
1
0.5
0
1910- 1930- 1950- 1970- 1990- 2010- 2030-
Political/Legal 1930 1950 1970 1990 2010 2030 2050

Decades
Source: http://www.census.gov/
 Legal and Political Environment

• Legal and Political Issues Facing

Marketers
 Intellectual Property Rights
 World Trade Organization (WTO)
 Common Law
 Code Law
 Antidumping Laws
 Legal and Political Environment

Cultural • Host country

Environment Minimum wage
legislation
Regulatory
measures
Socio-Economic
Lack of
Environment enforcement
• Home country
Import/Export
restrictions, etc.
Political/Legal
 Legal and Political Environment

Cultural • Intellectual
property rights
Environment
• Common law Vs
Code law
Tradition/
Socio-Economic
precedence vs
Environment comprehensive
written statutes
Often a mixture
of two systems
Political/Legal
 Legal and Political Environment

Cultural • International Law

Environment • World Trade
Organization
Defines
Socio-Economic economically
acceptable
Environment practices for its
member nations
Intent is to
provide stable
Political/Legal markets
INTERNATIONAL MARKET SELECTION

• Identification of Potential Markets

• Selectively expanding
Screening Process in Target Market
Choice

• Figure 3.3
 Market potential

Level of sales that might be

available to all marketers in
an industry in a given market.
 Sales potential

Share of the market potential that

a particular marketer may hope
to gain over the long run.
Expansion – Concentration versus
Diversification

• Concentration – market development

strategy that involves focusing on a
smaller number of markets

• Diversification – marketing development

strategy that involves expansion to a
relatively large number of markets.
 THE INTERNATIONALIZATION
PROCESS

Major Motivations to Internationalize

Profit advantage
Proactive
Unique products
Technological
advantage
Exclusive information
Tax benefit
Economies of scale
 THE INTERNATIONALIZATION
PROCESS

Major Motivations to Internationalize

Competitive pressures
Overproduction
Declining domestic
sales
Excess capacity
Saturated domestic
markets
Proximity to Reactive
customers/ports
ALTERNATIVE ENTRY STRATEGIES

• Indirect Exporting and Importing

• Direct Exporting and Importing

• Licensing (Franchising)

• Foreign Direct Investment

ALTERNATIVE ENTRY STRATEGIES

• First Tier
 Direct exporting/importing
 Indirect exporting/importing
 Licensing and franchising
• Second Tier
 Foreign Direct Investment
 Joint ventures
 Contract manufacturing
ALTERNATIVE ENTRY STRATEGIES

• Indirect Exporting
and Importing
 Intermediary used
to deal with
foreign customers
or firms
 Low management
commitment
 Often unintended
or unaware
ALTERNATIVE ENTRY STRATEGIES

• Direct Exporting
and Importing
 Control
international
activities better
 Can lead to further
growth with
trading partners
 Must find
customers,
markets
ALTERNATIVE ENTRY STRATEGIES

• Intermediaries
 Importers/Exporters
frequently use them
• Export
Management
Companies (EMC)
• Trading Company
ALTERNATIVE ENTRY STRATEGIES

• Licensing
 Use of
intellectual
property for
compensation
 Low capital
investment and
involvement
 Capitalize on
R&D
 Can create
competition
ALTERNATIVE ENTRY STRATEGIES

• Franchising
 Grant by parent
company to
independent entity to
do business in a
prescribed manner

 Sell franchiser’s
products using name
and marketing
techniques or
business approach

 Franchise must offer

high uniqueness with
high standardization
ALTERNATIVE ENTRY STRATEGIES

• Foreign Direct
Investment
 Generally large MNC
due to capital and risk
factors
 Need for wide market
access remedied by
acquisition
 Circumvent barriers to
trade
 Government incentives
ALTERNATIVE ENTRY STRATEGIES

• Full Ownership -
often desirable and
often impossible
• Joint Venture -
collaboration
between 2+
organizations
 Share assets, risks,
profits
 Partner brings local
expertise, influence
ALTERNATIVE ENTRY STRATEGIES

• Strategic Alliances -
Informal or formal
arrangements
between 2+
companies with
common objective
 Flexible to
environmental
conditions
 Pooling of expertise
ALTERNATIVE ENTRY STRATEGIES

• Contractual
Arrangements
 Cross-marketing
 Outsourcing
 Contract
manufacturing
Complementary Strengths Create
Value

• Figure 3.4
 COMPREHENSIVE VIEW OF
INTERNATIONAL EXPANSION

• Figure 3.5
 International Expansion
• 3 Factors to Market Approach
Market
Characteristics

Government
regulations
Customer
characteristics,
expectations, and
preferences
Purchase patterns
State of economic
development
Competitive
offerings
Climate and
geography
 International Expansion
• 3 Factors to Market Approach
Market Product
Characteristics Characteristics
Product constituents
Government
regulations Brand

Customer Positioning
characteristics, Packaging
expectations, and
preferences Country of origin

Purchase patterns
State of economic
development
Competitive
offerings
Climate and
geography
 International Expansion
• 3 Factors to Market Approach
Market Product Company
Characteristics Characteristics Considerations
Product constituents
Government
Brand Profitability
regulations
Positioning Market opportunity
Customer
characteristics, Packaging Policies
expectations, and
preferences Country of origin

Purchase patterns
State of economic
development
Competitive
offerings
Climate and
geography
International Expansion
International Expansion

• Mandates most
marketing-mix
adjustments
• Government
regulations are most
prevalent
 Standards (language,
ISO 9000, etc.)
• Product positioning
changes
International Expansion

• Global products
 Only changes possible
are to positioning
 Product timing based
on economic growth
• Price competition
 Foreign exchange
factor
 Extra costs incurred
(shipping, etc.)
International Expansion

• Climate and geography

 Food product
distribution is different
in many countries
International Expansion

• Cannot contain
features/ingredients in violation
of law/custom
• Standardization applied most
successfully in culturally similar
markets
• Promotional features and
packaging often varied
International Expansion

• “Is it worth it?”

• Can the company
justify
internationalization?
 Adjusting the Marketing Mix

• Standardized Approach

• Multi-domestic Approach

• Globalization Approach
 Factors Affecting Marketing-Mix
Adjustments

• Figure 3.6
 Product Decisions

• Design

• Branding

• Packaging

• Labeling
 Promotion Decisions

• Positioning

• Copy
 Promotion Decisions

• Figure 3.7
 Distribution Decisions

• Tactical and Market-by-market

 Pricing Decisions

• Price Escalation Due to Costs

• Foreign-exchange Rates
 IMPLEMENTING MARKETING
PROGRAMS WORLDWIDE

• Management Process

• Organization Structure
 IMPLEMENTING MARKETING
PROGRAMS WORLDWIDE

Headquarters

Division C

Division B

Division A
 IMPLEMENTING MARKETING
PROGRAMS WORLDWIDE

• Management Process
 Information flows between headquarters
and country organizations
 Information flows between country
organizations

Headquarters

Division C

Division B

Division A
 IMPLEMENTING MARKETING
PROGRAMS WORLDWIDE

• Management Process
 Personnel exchange
 Headquarters coordinates and leverages
combined resources
 Centralized marketing strategy with local
marketing augmentations
 Certain marketing-mix aspects are left
localized (distribution channels, etc.)
 IMPLEMENTING MARKETING
PROGRAMS WORLDWIDE

• Organization Structure
 Matrix style has replaced the country
division model
 Product groups coordinate efforts at
headquarters
Supplemental Material
 International Expansion

• 3 Ways to Approach International

Markets

Make no
special
provisions
 International Expansion

• 3 Ways to Approach International

Markets

Adapt to local
Make no conditions in
special each target
provisions market (multi-
domestic
approach)
 International Expansion

• 3 Ways to Approach International

Markets

Adapt to local Incorporate

Make no conditions in differences into a
special each target regional/global
provisions market (multi- strategy to allow for
domestic local
approach implementation
(globalization
approach)