EPRG Framework (Perlmuter)
Article by: Alexander Zeeman
EPRG Framework: this article explains the EPRG Framework in a practical way.
After reading, you’ll understand the basics of this powerful marketing tool.
What is the EPRG Framework?
EPRG stand for Ethnocentric, Polycentric, Regiocentric, and Geocentric. It is a
framework created by Howard V Perlmuter and Wind and Douglas in 1969.
It is designed to be used in an internationalization process of businesses and
mainly addresses how companies view international management orientations.
According to the EPRG Framework (or the EPRG Model), there are four
management approaches that an organization can take to get more involved in
international business substantially.
The EPRG Framework suggests that companies must decide which approach is
most suitable for achieving successful results in countries abroad.
For this reason, the EPRG Framework can be a useful tool to utilize if a
company does not know yet how to manage business activities between
companies in the local country and a host country. The EPRG Framework is
additionally useful for making strategic decisions.
In the following section of this article, the four approaches of the EPRG
Framework (Ethnocentric, Polycentric, Regiocentric, and Geocentric) are
described more in detail.
EPRG Framework approaches
Ethnocentric
In this approach of the EPRG Framework, the company in a local country
that wants to do business overseas does not put in much effort to do research
abroad about the host country’s market. Instead, most of the market
research is executed in the headquarters in the local country.
With this approach, the company seeks for markets abroad that share the
same characteristics as the local market so that the marketing strategy does
not have to be adapted. More specifically, the ethnocentric approach uses the
same marketing strategies that are created by local personnel and further
utilized multiple countries.
It is many times possible that companies that utilize this approach believe that
local products should not be adapted to the local need of countries abroad
because the products are already of high quality. Another reason could be that
a specific product is sold in large volume in the local market, and for this
reason, it is believed it will do the same in other markets abroad.
The ethnocentric approach of the EPRG Framework has benefits but also
downsides. At first, the company saves a lot of operational costs that can be
invested elsewhere. But the downside is that the company does not build up
new knowledge about the market abroad, which could substantially increase
sales volume if products and strategies would be adopted to the needs of the
host country.
Polycentric
In the polycentric approach of the EPRG Framework is the opposite of the
ethnocentric approach. A company that utilizes this approach carefully
consider different markets abroad to identify host countries that could
potentially offer the most benefits.
It means that if a company has a local headquarter and a separate office
overseas in a host country that manages the operations in that or more
countries, the marketing strategies are locally created and implemented based
on the local needs.
Businesses that utilize the polycentric approach of the EPRG Framework
strongly believe that every market has its differences. For this reason, these
types of companies implement different marketing strategies for each market.
In the polycentric approach, it is therefore easier to make strategic decisions
based on current cultural differences and political differences. Companies that
use this approach can also more easily adapt to changes in the market because
of their decentralized decision-making authorities.
The downside is that the local headquarter has less control over its operations
abroad. As long as the business operations in the host country demonstrate to
be successful, this might not be a problem. But if the business operations
overseas show to be not too profitable and result in losses, it is more difficult
for the local company to minimize those losses.
However, companies that use this approach learn by doing. For this reason, a
learning effect occurs, and new knowledge is an intellectual asset of the
company.
If a company is the first to enter a market or offer an unfamiliar product, the
local company has first-mover advantages. It could have the best location in a
host country to operate the business, and this could additionally substantially
increase profit margins.
Regiocentric
In a regiocentric approach of the EPRG Framework, businesses create and
implement internationalization strategies for specific regions. Companies that
utilize this type of approach use this for the area in which the local business is
operated.
It can also be that an organization utilizes two kinds of approaches. An
organization can use a regiocentric approach for the business in the region in
which it operates. And the same organization can use a polycentric or
ethnocentric approach to do business in countries outside the region.
Businesses that use a regiocentric approach of the EPRG Framework many
times believe that the markets in the region share the same characteristics of
the market in the home country.
It is still challenging to determine countries in one region that share the same
characteristics. Consider, for example; some companies use this approach
for NAFTA countries, which include the United States, Canada, and Mexico.
All countries are in the same region but still have some different characteristics.
The same implies for the Benelux, which include Belgium, Netherlands, and
Luxembourg. The countries are in the same region, but Belgium has different
market characteristic than the Netherlands and Luxembourg.
The reason why companies use this approach to group countries into for
example NAFTA and Benelux. is depending on the type of industry and product
or service. Every organization has its way of internationalization.
Geocentric
A geocentric approach of the EPRG Framework means that a business strongly
believes that it is possible to utilize one type of strategy for all countries,
regardless of the cultural differences.
However, companies that use this approach attempt to create products or offer
services in a way that best suit national and international customers. This
means that instead of believing that their product or service is excellent and
that it will sell in other markets, like in the ethnocentric approach, these
organization proactively adapt their products and services that best meet the
global needs.
Companies sometimes prefer this type of strategy of the EPRG Framework
because it does not involve many adoptions, which minimizes operational
costs. These companies use one strategy to sell a product or service, and could
for this reason, achieve economies of scale.
Organizations that have a geocentric approach are many times considered as
key international businesses because these companies utilize a combination of
the polycentric and ethnocentric approaches.
It means that organizations with a geocentric approach of the EPRG Framework
can identify similar cultural characteristic, and they can convert the different
cultural characteristics into mutual characteristics.
EPRG Framework conclusions
Determining which approach to utilize is dependent on the type of business
and in which industry it operates. Due to globalization, many companies
operate abroad or are willing to do business overseas. However, doing business
abroad really depends on the size of the company and the experience they
have.
Even if a business does not know yet what type of approach of the EPRG
Framework / EPRG Model is most suitable to the current position of the
company, it is always good to research potential markets in term of what size,
characteristic, and similar available products in the market.
There is a lot to learn from competitors. This knowledge is free, and it could
help to identify what opportunities are available, and thus, which approach of
the EPRG Framework is best for an internationalization process.
Now It’s Your Turn
What do you think? Do you recognize the explanation about the EPRG
Framework or is this the first time you heard of the model? Are you already
doing business abroad or do you want to do business in other markets? Which
approach is most suitable for your company? Do you have any tips or additional
comments?
Share your experience and knowledge in the comments box below.
More information
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marketing activities and strategies from domestic to foreign markets.
Journal of Global Marketing, 16(3), 105-129.
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Saddle River, NJ: Prentice Hall.
3. Miocevic, D., Crnjak-Karanovic, B. (2012). Global mindset–a cognitive
driver of small and medium-sized enterprise internationalization: The
case of Croatian exporters. EuroMed Journal of Business, 7(2), 142-160.
4. Moses, C., Moore, K., Pleasant, J., Vest, D. (2011). Adapting the EPRG
paradigm to internationalizing business schools: A conceptual
framework. International journal of business and social science, 2(23).
5. Richter, T. (2012). International marketing mix management: Theoretical
framework, contingency factors and empirical findings from world-
markets. Logos Verlag Berlin GmbH.
6. Sandberg, B., Hansén, S. O. (2004). Creating an international market for
disruptive innovations. European Journal of Innovation Management,
7(1), 23-32.
7. Shoham, A., Rose, G. M., Albaum, G. (1995). Export motives,
psychological distance, and the EPRG framework. Journal of Global
Marketing, 8(3-4), 9-37.
8. Wind, Y., Douglas, S. P., Perlmutter, H. V. (1973). Guidelines for developing
international marketing strategies. Journal of Marketing, 37(2), 14-23.
How to cite this article:
Zeeman, A. (2019). EPRG Framework (Perlmuter). Retrieved [insert date] from
Toolshero: https://www.toolshero.com/marketing/eprg-framework-
perlmutter/
Original publication date: 14/03/2019 | Last update: 12/20/2024
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