Advanced Marketing

Session #1INTERNATIONAL

MARKETING

Agenda:

1. Review over general marketing

2. International marketing definition

3. Factors affecting economy in the USA

4. International marketing task

5. Major obstacles and barriers for international marketing

6. Stages of international marketing

Subjects we have discussed before in previous marketing course:

•The evolution of marketing was and sales over times starting from the production era till the societal marketing.

•Studied the 4ps and their importance in writing the marketing plan

•Importance of marketing research and knowledge before taking any decision in business

•Positioning, branding and targeting customers, segmentation

let's start a new and more professional levelof marketing:

INTERNATIONAL MARKETING

Foreign markets and trade lines between countries is know thousands of years ago.

1. Chinese silk has been available in Europe since Roman times!

2. Turkish coffee

3. Egyptian cotton

Although a truly global trading system would not evolve until some 500 years later those people had the sense of marketing and specially

INTERNATIONAL MARKETING

International marketing:

Is the performance of business activities designed to plan, price, promote and direct the flow of a company's goods and services to consumers or users in more than one nation at a profit.

Simply:

The difference between domestic "internal" marketing and international market is that in the latter case, marketing activities take place in different countries.

1st we need to know

Why companies go international marketing?

1. More Profit: of course it will improve the economic state of the country and will bring more profit to the company

2. Reputation and More exposure: this may be important for tourism, etc.

3. Cheaper labor and cost: places like china, labor costs much less. So some businesses may go open factories and establish businesses there.

4. High competition from international companies in their local markets so they can compensate losses due to foreign competition & many companies are owned by foreigners.

As the 1st country to apply international marketing by its modern concept

The United States Of America became one of the most economic powerful countries in the world

As a result of that; Economically the whole world is affected by business in America.

As we need to know more about American markets and economy; here are the factors that affected the American and the global markets as well

A- The factors that negatively affected the American markets internationally are mainly:

1. The high-tech bust of 2001

2. Enron and WorldCom scandals

3. September 11th attacks on the World Trade Center and Pentagon

4. Wars in Afghanistan and Iraq

5. International conflict among China, Taiwan, and the United States

6. 2003 SARS outbreak in Asia

7. Global terrorism, e.g., Indonesia, Israel, India, and Morocco

B- The factors that positively affected the AmericanInternational markets are:

1- Regional free trade E.g. NAFTA: USA increased it exports to Canada and Mexico by 157%Mexico & Canada increased their exports to USA by 250%European Union: is the biggest supporter For the American community

2- GlobalizationImpact of the Internet and other global media on the dissolution of national borders

All these factors give us a proof that wherever

•A business decision is made

•A natural disaster happens

•A scandal or even a rumor is raised

It doesn’t only affect the country it happened in but also affect all the international markets.

The international marketing task:

•The international marketer's task is more complicated than that of the domestic marketer because the international marketer must deal with at least two levels of uncontrollable uncertainty instead of one.

•Uncertainty is created by the uncontrollable elements of all business environments, but each foreign country in which a company operates adds its own unique set of uncontrollable factors.

The International Marketing Task

7

3. Economy

Environmentaluncontrollablescountry market A

Environmentaluncontrollablescountrymarket B

Environmentaluncontrollablescountrymarket C

1. Competition

1. Competition

2. TechnologyPrice Product

Promotion Place orDistribution

6. Geography andInfrastructure

Foreign Environment(Uncontrollables)

7. Structure ofDistribution

3. Economy

5. Political-Legal

Domestic environment(Uncontrollables)

(Controllables)

2 .Technology

4. Culture

5. Political-Legal

4. Culture

Target Market

Controllable environment: factors that you can control or you are the one who are deciding them according to your own vision and objectives.

4Ps of your plan:

•1st of all you should know yourself well, your position in the market.

•You should have complete knowledge about you own products, prices categories, places of distribution and how are you promoting your products.

•How you position yourself in the market?

•What is your brand image?

•What are the segments you are working on?

"Uncontrollable" domestic environment: are the factors you cannot control in your own country. But it's very important to study them because the affect your business either in your own country or internationally.

1. Competition e.g. Kodak in U.S

2. Economy

3. Political regulations

"Uncontrollable" foreign environment: for sure it is very important to study the foreign environment to know where you are going and to be prepared to face differences and adapt to differences.

1. Structure of distribution

2. Geography

3. Infrastructure

4. Competition

5. Technology

6. Economy

7. Culture

8. Political regulations

From the previous after we know the international marketing task we can conclude that:

The only constant in international marketing is

DIFFERENCE

either in culture, political regulations, economy, technological status, etc.

Therefore:

ENVIRONMENTAL ADAPTION IS NEEDED

•The most challenging and important one confronting international marketers

•Marketers must be able to interpret effectively the influence and impact of each of the uncontrollable environment element on the marketing plan for each foreign market in which they hope to do business.

The major obstaclesfor adapting to different cultures are:

Self-Reference criterion "SRC“:

It is an unconscious reference to one’s own cultural values, experiences, and knowledge as a basis for decisions.

Ethnocentrism:

It refers to the notion that one’s own culture or company knows best how to do things.

To AVOID SRC:

1. Define goals in your own country and your values.

2. Define goals in foreign market and their culture and beliefs.

3. Isolate the SRC influence& study howit complicated the problem.

1. Redefine the problem without SRC.

Culture is not the only obstacle in international marketing but also we face:

1. Historical events between nations influence business

2. Geography

3. Natural Resources

4. Protectionism

5. The Impact of Tariff (Tax) Barriers

6. Non-Tariff Barriers

Historical events between nations influence business:

• The impact of specific events in history can be seen reflected in technology, social institutions, cultural values, and even consumer behavior.

• The military conflicts in the Middle East in new cola brands, Mecca Cola, Muslim Up,

and Arab Cola.

Geography & Natural resources:

• Countries with hostile climates associated with economic stagnation.

• Countries that suffer the most from major calamities ”disasters” are among the poorest in the world.

• USA: consumes 17 million barrels of petroleum, so they export 54% from Middle East

• Influences ability to market products.

Protectionism: Countries use protectionist measures to shield a country’s markets from intrusion by foreign competition and imports.

•Maintain employment and reduce unemployment.

•Increase of business size.

•Protection of the home market.

•Encouragement of capital accumulation.

•Maintenance of the standard of living and real wages.

•Conservation of natural resources.

•Protection of an infant industry.

•Industrialization of a low-wage nation. •National defense.

The Impact of Tariff (Tax) Barriers:

• Increase Inflationary pressures, Government control and political considerations in economic matters and Special interests’ privileges.

• Weaken Balance-of-payments positions,Supply-and-demand patterns,International relations (they can start trade wars).

• Restrict Manufacturer’ supply sources, Choices available to consumers, Competition.

Non-Tariff Barriers:

• Specific Limitations on Trade• Customs and Administrative Entry Procedures• Standards• Government Participation in Trade• Charges on imports

To be globally aware is to have:

1. Tolerant of Cultural Differences

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

Stages of international marketing involvement:

1. No Direct Foreign Marketing

2. Infrequent Foreign Marketing

3. Regular Foreign Marketing

4. International Marketing

5. Global Marketing

No Direct Foreign Marketing:

•In this stage company does not cultivate customers in other countries

•their product may be available there as some retailer bought it from abroad and reselling them inside his home country

•This also can be known from inquiries or orders for the product from a country where the product doesn't present and this will be through the website of the company.

Infrequent Foreign Marketing

•In this stage temporary surplus caused by variation in production level or demand may result in infrequent marketing overseas.

•i.e. this year I have a huge surplus so I will provide my products in foreign markets but last year I had no enough surplus so I didn’t.

Regular Foreign Marketing

•The firm has a permanent productive capacity devoted to the production of goods to be marketed in foreign markets.

•The firm may have overseas intermediaries or may be it has its own sales force there. E.g. "Red Bull" in Egypt

International Marketing

•Companies in this stage are fully committed to and involved in international marketing activities.

•Such companies seek markets allover the world and sell products that are a result of planned production for markets in various countries.

•This planning entails not only the marketing but also the production of goods outside the home market.

•E.g. when "Nestle" first entered Egypt for the market of ice-cream then they bought "Kimo ice-cream"

Global Marketing:

The transition from international marketing to global marketing is often catalyzed by a company's crossing the threshold "limit or roof" at which more than one half its sales revenues come from abroad.

•At global marketing level the most profound change is the orientation of the company towards the markets including their domestic market as well.

•At this stage the company treats the whole world as one market.

•e.g. McDonald's

Strategic orientation of international marketing:EPRG Schema

1. Ethnocentric or Domestic Marketing Extension Concept

2. Polycentric or Multi-Domestic Marketing Concept

3. Regiocentric

4. Geocentric

1.Ethnocentric or Domestic Marketing Extension Concept:

• Home country marketing practices will succeed elsewhere without adaptation

• International marketing is viewed as secondary to domestic operations.

• e.g. TGI Fridays

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.

•E.g. Gerber & Pepsi

3. Regiocentric and 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.

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

•E.g. Carrefour

Questions