lecture 1 - the scope and challenge of international marketing

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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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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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 and Global Marketing and Related Fields of Study

InternationalBusiness

InternationalMarketing

InternationalManagement

InternationalFinance

InternationalTradeGlobal

Marketing


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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 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 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

lecture 1 - the scope and challenge of international marketing

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