lecture 1 - the scope and challenge of international marketing
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8/12/2019 Lecture 1 - The Scope and Challenge of International Marketing
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The Scope and Challenge ofInternational Marketing
INTERN TION L
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Global Perspective: Recent Events
Information technologyboom of the late 1990s
Warsin Afghanistan and Iraq
September 11th attacks on the World TradeCenterand Pentagon
Enronand WorldComscandals
The high-tech bustof 2001
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Global Perspective: Recent Events
2003 SARSoutbreak in Asia
Global terrorism, e.g., Indonesia, Israel,India, and Morocco
Transcending these events, internationalcommercecontinued
International conflictamong China,
Taiwan, and the United States
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Global Business Trends
The rapid growth of the
World Trade Organizationand regional free tradeareas, e.g., NAFTA and theEuropean Union
General acceptance of the
free market system amongdeveloping countries inLatin America, Asia, andEastern Europe
Impact of the Internet andother global media on thedissolution of nationalborders, and
Managing globalenvironmental resources
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Internationalization of U.S. Business
Increasing globalization of
markets
Firms face competition
on all fronts
Many U.S. companies arenow foreign controlled
U.S. firms seeking foreignmarkets to increaseprofits
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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 alternativemethods of marketing their products and services.
In a study conducted on U.S. manufacturing companiesof all sizes, it was found that multinational companies
outperformed their strictly domestic U.S. counterpartsby more than twice as fast in sales and earned muchgreater returns on equity and assets.
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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 growthpotential.
Some tasks associated with international marketingnot included (or less intense ) than in domesticmarketing (e.g., cultural research, political factors,exchange rates, trade laws, long distancedistribution).
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Importance of International Marketing
International and Global Marketing
Multi-Country Marketing Global Marketing
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International Marketing: A Definition
International and Global Marketing and Related Fields of Study
InternationalBusiness
InternationalMarketing
InternationalManagement
InternationalFinance
InternationalTrade
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International Marketing: A Definition
International and Global Marketing and Related Fields of Study
InternationalBusiness
InternationalMarketing
InternationalManagement
InternationalFinance
InternationalTradeGlobal
Marketing
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International Marketing: A Definition
International Marketing was a stage in the evolution of GlobalMarketing
Stage 1 Domestic Marketing:Companies manufacturingproducts and selling those within the country itself. So, nointernational phenomenon at all.
Stage 2 Export Marketing:Company starts exportingproducts to another countries also. This is the very basicstage of global marketing called ethnocentric becausealthough he is selling goods to foreign countries, productdevelopment is totally based upon the taste of localcustomer. So, focus is still on domestic market
Stage 3 International Marketing:Now, company startsselling products to various countries and the approach isPolycentrici.e. making different products for differentcountries.
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International Marketing: A Definition
International Marketing was a stage in the evolution of GlobalMarketing
Stage 4 Multinational Marketing:The number ofcountries in which the company is doing business getsbigger than that in earlier stage. And so, instead ofproducing different goods for different countries, company
tries to identify different regions for which it can deliversame product. So, same product for countries lying in oneregion but different from product offered in countries ofanother region. This approach is called Regiocentricapproach
Stage 5 Global Marketing:Final stage of evolution inwhich company really operates in a very large number ofcountries and for the purpose of achieving cost efficienciesit analyses the requirement and taste of customers of allthe countries and come out with a single product which cansatisfy the needs of all. This approach is called Geocentricapproach.
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Generally, four distinctive approaches dominate strategic thinking ininternational marketing:
Strategic Orientation: EPRG Schema
1. Ethnocentric or Domestic Marketing Extension Concept:
2. Polycentric or Multi-Domestic Marketing Concept:
Opposite of ethnocentrism
Management of these multinational firms place importance
on international operations as a source for profitsManagement believes that each country is unique and
allows each to develop own marketing strategies locally
Home country marketing practices will succeed elsewhere
without adaptation; however, international marketing is
viewed as secondary to domestic operations
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Generally, four distinctive approaches dominate strategic thinking ininternational marketing:
Strategic Orientation: EPRG Schema
3. Regiocentric:
4. Geocentric:
Regiocentric and Geocentric are synonymous with a Global
Marketing Orientation where a uniform, standardized
marketing strategy is used for several countries, countries ina region, or the entire world
Sees the world as one market and develops a standardized
marketing strategy for the entire world
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International Marketing: A Definition
International marketing is defined as theperformance of business activities
designed to plan, price, promote, anddirect the flow of a companys goods andservices to consumers or users in more
than one nation for a profit
Marketing concepts, processes, and principles are universallyapplicable all over the world
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The International Marketing Task
7
3. Economy
Environmentaluncontrollablecountry market AEnvironmentaluncontrollablecountrymarket BEnvironmentaluncontrollablecountrymarket C
1. Competition
1. Competition
2. Technologyrice ProductPromotion Place orDistribution
6. Geography andInfrastructure
Foreign EnvironmentUncontrollables)7. Structure ofDistribution
3. Economy
5. Political-Legal
Domestic environmentUncontrollables)Controllables)
2 .Technology4.Culture
5. Political-Legal 4.Culture
TargetMarket
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Environmental Adaptation Needed
Differences are in the uncontrollable environment ofinternational marketing
Firms must adapt to uncontrollable environment ofinternational marketing by adjusting the marketing mix(product, price, promotion, and distribution)
Local Adaptation(of Marketing Mix) Global Standardization(of Marketing Mix)
Continuum
INFLUENCED BY 7 ENVIRONMENTAL FACTORS
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International Strategy Choices
There are four basicstrategies in which toenter and compete inthe internationalenvironment.
The suitable strategyfor a company is basedon the extent of
pressure faced forglobal integration andlocal responsiveness.
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International Strategy Choices
S lf R f C i i (SRC)
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Self-Reference Criterion (SRC)and Ethnocentrism:Major Obstacles
SRCis an unconscious reference to ones own culturalvalues, experiences, and knowledge as a basis fordecisions
Ethnocentrismrefers to the notion that ones own cultureor company knows best how to do things
Both SRC and ethnocentrism slow down the ability toassess a foreign market in its true light
Reactions to meanings, values, symbols, and behaviorrelevant to our own culture are different from those of
foreign Relying on ones SRC could produce an unsuccessful
marketing program
S lf R f C it i (SRC)
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Self-Reference Criterion (SRC)and Ethnocentrism:Major Obstacles
To illustrate the impactof the SRC, considermisunderstandingsthat can occur aboutpersonal spacebetween people ofdifferent cultures.When someone is tooclose or too far away,we feel uncomfortableand either move
further away or getcloser to correct thedistance we arerelying on our SRC
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Avoiding the Self Reference Criterion
To avoid the SRC, the following steps are suggested:
1: Define the business problem or goal in home-countrycultural traits, habits, or norms
2: Define the business problem or goal in foreign-countrycultural traits, habits, or norms. Make no value judgments
3: Isolate the SRC Influence in the problem and examine itcarefully to see how it complicates the problem
4: Redefine the problem without the SRC influence and solvefor the optimum business goal situation*
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Developing a Global Awareness
To be globally aware is to have:
1. Tolerantof Cultural Differences, and
2. Knowledgeableof:(a) Culture, (b) History, (c) World Market Potential,
(d) Global Economic, Social and Political Trends
St g f I t ti l M k ti g
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Stages of International MarketingInvolvement
In general, firms go through five different phases in going
international:
Infrequent Foreign Marketing
No Direct Foreign Marketing
International Marketing
Regular Foreign Marketing
Global Marketing
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Stages of Int. Mark. Involvement
No Direct Foreign MarketingCompany does not actively pursue customers in foreign markets,but receives them through unintended channels - Products arebought abroad through domestic wholesalers/distributors, website on theinternet
Infrequent Foreign MarketingCompany sells to foreign markets only when a temporarysurplus of product exists. Once surplus is gone, foreign activity isgone.
Regular Foreign MarketingCompanies produce their products and services to primarily selldomestically, but also internationally Through domestic/foreignmiddlemen, sales force in foreign countries
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Stages of Int. Mark. Involvement
International Marketing
Companies are fully engaged in international marketingstrategies Companies are now international or multi-national
Global MarketingChange from its marketing activities to all activities focused in aglobal perspective.In most cases companies sales revenues are more than of its
total revenuesTreat the world as one marketMarket segment is no longer focused on national borders,
rather such things as income levels, usage patterns, or otherfactors are looked across borders
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