Unit I

Introduction

• More firms are entering foreign markets

• A global perspective requires execution, planning,
organization, and willingness to try new approaches—such as
engaging in collaborative relationships
• We will discuss International marketing management concepts,
Process of International Marketing, International Dimensions
of Marketing, Domestic vs. International Marketing,
Applicability of Marketing and Characteristics of MNCs.
Coordinating marketing activities, recognising constraints of
the global environment and benefits of International Marketing.
 Why are more
businesses going Internationally?
• Liberalization of trade and resource movements
• Development of services that support
international business activities
• Improvements in logistics & technology
• Growing consumer demand for foreign products
• Increased global competition
• Changing political and economic situations
• Expanded cross-national treaties and
agreements
 Reasons That Firms Engage in
International Business

• To expand sales
• Volkswagen [Germany]
• Ericsson [Sweden]
• Michelin [France]
• Nestlé [Switzerland]
• IBM [USA]
• Seagram [Canada]
• Sony [Japan]
More Reasons That Firms Engage in
International Business
• To acquire resources
• Products, components, services
• Foreign capital
• Technologies
• Information

• To minimize risk
• Take advantage of business cycle
differences amongst countries
• Diversify suppliers across countries
• Counter competitors’ advantages
 Reasons for marketing
abroad
 Economies of scale and scope
 Existence of lucrative(financial gain) markets
in foreign countries
 Saturated (overfill or surfeit or excess)
markets in the home country
 High R&D costs
 International opportunities
 Less competition
 New trade agreements
…
 Marketing Internationally need International
Business Managers

• Must understand the relevance of:

– Domestic and international law
– Political science
– Anthropology (The science of humankind)
physical anthropology -- science of human zoology, evolution, and ecology.
social anthropology(cultural anthropology) - science of human social and cultural
behaviour and its development
– Sociology
– Psychology
– Economics
– Geography
• Must be knowledgeable about the competitive
dimensions of the international business
environment
 International Perspective: Recent Events
Growing
Growing uncertainties
uncertainties and
and potential
potential for
for economic
economic growth
growth

The
The economic
economic meltdown
meltdown in in the
the US
US and
and its
its
impact
impact on
on other
other countries
countries

Stalled
Stalled Talks
Talks at
at the
the Doha
Doha Round
Round of
of WTO
WTO

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

Wars
Wars in
in Afghanistan
Afghanistan and
and Iraq
Iraq and
and growing
growing anti-
anti-
Americanism
Americanism

Talks
Talks on
on the
the Climatic
Climatic Change
Change and
and Global
Global Warming
Warming
Global Perspective: Recent Events

Rise
Rise of
of Brazil,
Brazil, Russia,
Russia, India
India and
and China
China
(BRICS)
(BRICS)

Global
Global outbreak
outbreak of
of diseases
diseases (SARS,
(SARS,
Avian
Avian && Swine
Swine Flu,Madcow
Flu,Madcow etc.)outbreak
etc.)outbreak

Global
Global terrorism,
terrorism, e.g.,
e.g., Indonesia,
Indonesia, Israel,
Israel, Pakistan
Pakistan
India,
India, UK,
UK, Spain,
Spain, and
and Morocco
Morocco

Transcending
Transcending these
these events,
events, international
international
commerce
commerce continued
continued
 Global Business Trends
1.
1. The
The rapid
rapid growth
growth ofof the
the 2.
2. General
General acceptance
acceptance ofof the
the
World
World Trade
Trade Organization
Organization free
free market
market system
system among
among
and
and regional
regional free
free trade
trade developing
developing countries
countries in
in Latin
Latin
areas,
areas, e.g.,
e.g., NAFTA
NAFTA and and the
the America,
America, Asia,
Asia, and
and Eastern
Eastern
European
European Union
Union Europe
Europe

3.
3. Impact
Impact of
of the
the Internet
Internet and
and
other
other global
global media
media onon the
the 4.
4. Managing
Managing global
global
dissolution
dissolution of
of national
national environmental
environmental resources
resources
borders,
borders, and
and
 International Marketing Management

International
International Marketing
MarketingManagement:
Management: An
An Old
OldDebate
Debate and
and aa New
NewView
View

• Global Marketing Management thought has

undergone substantial revision
• In the 1970s the argument was framed as
“standardization vs. adaptation”
• In the 1980s it was “globalization vs.
localization” or “Think local, act local”
• In the 1990s it was “global integration vs.
local responsiveness”
• The basic issue is whether the global
homogenization of consumer tastes allowed
global standardization of the marketing mix
 The Nestle Way

•• Nestlé
Nestlé sells
sells more
more than
than8,500
8,500 products
productsproduced
produced in
in 489
489 factories
factories in
in 193
193countries
countries

•• Nestlé
Nestlé isisthe
the world’s
world’sbiggest
biggest marketer
marketer of
ofinfant
infant formula,
formula, powdered
powdered milk,
milk, instant
instant
coffee, chocolate, soups, and mineral water
coffee, chocolate, soups, and mineral water

• The “Nestlé way” is to dominate its

markets can be summarized in four
points:
(1) think and plan long term
(2) decentralize
(3) stick to what you know, and
(4) adapt to local tastes
 International Marketing: A Definition

International
International marketing
marketing is is defined
defined as
as the
the
performance
performance of of business
business activities
activities designed
designed to to plan,
plan,
price,
price, promote,
promote, and
and direct
direct the
the flow
flow of
of aa company’s
company’s
goods
goods and
and services
services toto consumers
consumers or or users
users in
in more
more
than
than one
one nation
nation for
for aa profit
profit

Marketing
Marketing concepts,
concepts, processes,
processes, and
and principles
principles are
are universally
universally
applicable
applicable all
all over
over the
the world
world
 Basic rules of IM
• All aspects of market planning
have to be reexamined
• What works in one place MAY not
work in another
 Insights
In Hong Kong, a German businessperson is
driving a Lexus; he’s wearing Bruno Magli
shoes, Irish cashmere socks, Calvin Klein
underwear, an Armani suit, with a Gucci belt.
He has a Mont Blanc pen, in his Italian shirt.
He’s going to meet an American investor at a
KFC restaurant, for a Coke. After lunch, they
stop for a Baskins-Robbins (actually a foreign
firm) ice cream sundae. --- OK, that’s a
stretch.
When he gets home, sitting on an ottoman, he
has an Absolut vodka nightcap, while listening
to American country western music.
 Challenges in IM
• Huge Foreign indebtedness
• Unstable governments
• Foreign-exchange problems
• Foreign entry and government bureaucracy
• Tariffs and other trade barriers
• Corruption
• E-commerce---doesn’t offer complete
solutions
• Technological pirating
• High cost of product and communication
adaptations
• Marketing has become more complex.
• Increases in new products, product
extensions, high cost of distribution.
• Expansion of retailer control and power,
changing media habits, overload of
information, and array of
communication choices.
• Ultimate goal of programs
• Timing goals
 Global Integration Forces
Driving Forces
• Technology
• Culture
• Costs
• Free Markets
• Economic Integration
• Peace
• Strategic Intent
• Management Vision, Strategy and Action
 Global Integration Forces
Restraining Forces
• Culture
• Market Differences
• Costs
• National Controls
• Nationalism
• Peace vs. War/ Stability
• Management Myopia (appear blurred- not
knowing long term results)
• Organization History
• Domestic Focus
 Globalisation
• Levitt: development of global
markets for global products
• Onkvisit and Shaw on branding
 Levitt
• Technology is globalising the world
economy
• Almost everyone, everywhere
wants global products
• Prefer low prices to supposed
national characteristics
• example of refrigerators in Europe
 Globalisation
• growth of world trade
• liberalisation
• falling transport and communication
costs
• mobility of capital, technology and
products
• global markets
– computers…soft drinks..clothes..foods
 Patterns of globalisation
• Global economy is not uniform
• Nation states
• Blocs and organisations
• Why they are important?
Access to markets and rules for
operating in markets
 Blocs
• APEC
• NAFTA
• ASEAN
• EU
• “…the world is becoming more
homogenous…”
• “...distinctions between national
markets are fading and may
disappear…”
 Liberalisation
• GATT>>>WTO
• Uruguay Round
• Lowered tariffs
• NTB still prevalent
– eg standards and regulations
 3 Facets of the business
environment
• Economic
– currency
– employment
• Political
– laws and regulations
• Social
– demographic and lifestyle trends
 Economic theory
• Ricardo’s ‘comparative advantage’
• Not the same as ‘competitive advantage’
• Countries should specialise
• Political reasons why specialisation is limited
• eg US lamb market, Australian apple market
• Trade growing faster than world economy
• IM growing in importance
Analysing the environment
• Getting information
• Information is difference between
selling and marketing
• The more we know and understand
the better our marketing is likely to
be
• Good marketing strategies need
foundation of quality information
 quality information
• Customers
• Competitors
• Business Environment
– laws and regulations
– technology
– social trends
 Information for marketing
purposes
• Looked at market research
• MR: Research + analysis
• research - getting and structuring
information
• analysis -using the information to
answer specific questions
– what price will consumers pay for my
product?
 Environmental analysis
• Frameworks
– what we are doing in project
• PEST
– political
– economic
– social/cultural
– technological
 frameworks
• SLEPT
– social
– legal
– economic
– political
– technological
• C factors
– culture
– competitors
– currencies
 frameworks are tools
• Components and emphasis of
framework relate to specific
industry/products
• High-tech products may more
attention to technology, less to
culture
• Education? Wine?
 General to specific

• Broad picture
– which countries drink/import wine?
• Select promising countries for
further research (screening)
• Go into more depth
• perhaps exclude further countries
-Iterative process (repetition of
action)
 The Internet
• Network (web) of interconnected
computers
• Two main components
• Email
• World Wide Web
 Email and Web
• Different and smart companies use
both
• elements of convergence
• both global, cheap
 Impact of Internet
• Internet having impact on all types
of business
• Main use b2b
– Supply chain management
• Goods eg wine
• Service eg educational services
 International Dimension of Marketing
• Consumer Marketing v.s. Business-to-Business Marketing
• Domestic Marketing v.s. Foreign Marketing (US company in US Vs
US Company in UK)
• Domestic Marketing v.s. International Marketing
– Similar in nature but not in scope (scale)?
– Different in degree but not in kind?

• Comparative Marketing (two or more marketing systems examined,

similarity and dissimilarities between system identified)
• International Marketing (market between nations: how, why product
succeeds or fails in abroad) v.s. Global/multinational Marketing
(nothing is foreign of domestic: world market and global
opportunities)
Process of International Marketing
Management
Principle of Research
• Understand the consumer-behavior
perspectives.
• Be sure you are asking right questions.
• Use appropriate research techniques and
controls.
• Present clear, comprehensive and “actionable”
results.
• We study people using geographics,
demographics, psychographics, lifestyles, and
behaviors.
• Bodily adornment, cooking, courtship, food
taboos, gift giving, language, marriage,
status, sex, and superstitions, in all societies,
although each society attaches different
values and traditions.
• The world, countries, regions, and
subcultures.
• Different groups of people share
subcultures---values, customs, and traditions.

• Geomarketing uses these differences in

foods, terminology, subculture identities.
• Example: Global youth are notorious for
challenging norms and defying labels. A
study of 27K teenagers in 44 countries.
Insights and motivations.
• Six different segments.
• But remember that even in a specific
country the teenagers are not
homogeneous.
• Six segments in a Teen World values
research study.
• Thrills and Chills. Driving principles---fun,
excitement, irreverence and friends. Expect
everything in life. Make it a goal to get as
much and as many good times. Popular kids
in schools. Brand loyal. Mostly in Germany,
England, Greece, South Africa, Netherlands,
US, Belgium and Canada. 18%
• Resigned: Fun, Friends and Low
expectations. Little discretionary income.
Cynical. Denmark, Sweden, Korea, Norway,
Germany, Belgium, Argentina, Canada and
Turkey 14%
• World Savers. Defining principles: Fun,
Humanism, and friends. Models of what gives
hope to next generation. Good kids, who care.
Technologically advanced. Motivated by new
and exciting. Attracted by honest and sincere
messages. Sophisticated, sense of humor.
Hungary, Philippines, Venezuela, Brazil, Spain,
Argentina, Russia, France, Poland. 12%
• Quiet Achievers. Success, quiet, anti-
individualism, social optimism. Have
determination and restraint. Study hard. Do
well in school. Limit outside activities. Thailand,
China, Hong Kong, Korea, Russia, Peru. 15%
• Bootstrappers. Defining principles:
Achievement, Individualism, optimism,
determination, power. Try hard to please
parents. Determined to succeed. Positive
values. One in four in US; 14% overall.
Nigeria, Mexico, US, India, Chile, Puerto
Rico, Peru and Venezuela.
• Upholders. Family, tradition, respect for
individuals. Dreamy. Quiet. Good teens.
Follow their parents. Don’t like risks. Use
proven products. Vietnam, Indonesia,
Taiwan, China, Italy, Peru, India, 16%
Principle of Integrated Marketing:
• Marketing is everyone’s business.
• “Marketing Community”

Examples:
• Coca-Cola, Merrill Lynch, Xerox,
American Express, British Airways,
Gillette.
• When all of the departments work together
to serve the customer’s interests.
• Works on two different levels: All of the
various marketing functions work together:
sales force, sales promotion, advertising,
PR, Product development, Marketing
research
• Plus all of the departments work together.
They must “Think Customer.”
Global Standardization or Adaptation
• Toyota built the Corolla on a world
platform. Ford with its Focus.
McDonald’s uses chili sauce (salsa) on
its hamburgers in Mexico. Coca-Cola is
can be sweeter, or less carbonated.
• Adaptation elements: Product features,
brand name, labeling, packaging, colors,
materials, prices, sales promotion,
advertising themes, media, execution.
• Marketing programs do work best when
they are tailored to each target group.
An endless process or principle:
• Customer attraction
• Customer satisfaction
• Customer retention.
• CEO is also the Chief Marketing
Officer.
Principle of Competition: Value War
• Create long-tern customer value.
• Continuously and consistently crated
customer value.
• Look at total customer benefits vs.
customer expenses
• Ultimate goal of project
• Relationship to other projects
• High-level timing goals
Principle of Customer Satisfaction
and Retention
• Look at overall satisfaction and
customer loyalty
• Easier to retain a customer than to
gain or win a new one.
• Consistently improve customer
value to win the marketing war.
Principle of Integration:
• Learn about the needs and wants.
• There are no “average” customers.
• Concentrate on the individual
differences while looking at
segmentation, targeting and
positioning.
More on Integration:
• Plan for and review differences in
culture, markets, economic
development, consumer differing
needs, usage patterns, media
availability and legal restrictions.
Principle of Anticipation and Being Proactive.
Not Reactive.
• Are you ready for change? Being adaptive to
the marketplace.
• Macroenvironment Changes. The high income
growth country has shifted from Japan to US.
Low to medium has been concentrated in
Southeast Asia and southern Asia with India
& China as a unique, high-growth, large
country in the region and the world. Also
look at Singapore, Taiwan and South Korea.
• The old trade model is just old.
• It stated that as a product matures,
production would shift to low-wage
countries.
• Today, must look at transportation costs,
availability of skilled labor, market
responsiveness, market access and
innovation in product design and
manufacturing. Especially of products
with less than 15% of labor in total cost.
Principle of Branding:
• The umbrella. Determines price and value. Be
more than a commodity.
• A brand is a name, term, sign, symbol, or
design or a combination of them to identify
the goods and services of a seller and to
differentiate them from the competitors.
• Identifies seller or maker. We see a huge
increase in the global brands for autos, food,
clothing, electronics and more.
• Increasing number of cross-border marketing
alliances.
Principle of Service:
• Service before, during and after
sale.
• Create long-term value and
connect with customer.
• Both products and services. It’s
creating more value.
Principle of Process:
• Commands the company to be the captain of
its supply-chain. It should manage from raw
materials to finish goods. Enhance value-
creating activities.
• Look at Strategic Alliances/Partners . Can be
suppliers, customers and even parts of
competitors. Benchmarking, reengineering,
outsourcing, mergers, and acquisitions are
examples.
• Brand, service and process are three value-
creating principles and drivers to win
customers and deliver market share.
Principles of STP:
• Segmentation, Targeting and
Positioning
• Process of segmenting. Look at
demographics, geographics,
psychographics (The study and classification of people
according to their attitudes, aspirations, etc) and behavior

variables.
• Look for market opportunities.
Principle of Differentiation:
• Don’t be different just to be
different.
• Design and plan for meaningful
differences versus the competitors.
• Design truly different and unique
products for customers.
Principle of Selling:
• Integrate Company, Customers and
Relationships/Partnerships.
• Create long-term relationships with
customers.
• More than personal selling.
• Features and benefits of the product.
• AIDA: Awareness-Interest-Desire-Action.
• Manage communication.
Principle of Balance:
• After focusing on the elements of
marketing---segmentation, targeting,
positioning (STP), differentiation,
marketing mix, selling, branding, service
and process, you need to balance the
strategies, tactics and implementation.
• Share of Heart and Mind. Share of Voice.
• Dynamic environment. Timing.
• High-level timing goals
Principle of Positioning:
• The act of designing the product or
service (company’s offering and
image) to occupy a distinctive
place in the target market’s mind.
• Ultimate goal of product.
Differentiation
• Relationship to other products.
Principle of Future:
• Manage today’s products by
managing a profit and by servicing
customers of today and tomorrow.
• Develop tomorrow’s products.
• Look at Marketing Myopia.
 Differences between domestic and
international marketing
Domestic International
Research data is available in a Research data is generally in foreign
single language and is usually languages and may be extremely
easily accessed difficult to obtain and interpret
Business is transacted in a single Many currencies are involved, with
currency wide exchange rate fluctuations
Head office employees will Head office employees might only
normally possess detailed possess and outline knowledge of the
knowledge of the home market characteristic foreign markets
Promotional messages need to Numerous cultural differences must
consider just a single national be taken into account
culture
Market segmentation occurs within Market segments might be defined
a single country across the same type of consumer in
many different countries.
 Differences between domestic and
international marketing (continued)
Domestic International
Communication and control are International communication and
immediate and direct control might be difficult
Business laws and regulations are Foreign laws and regulations might
clearly understood not be clear
Business is conducted in a single Multilingual communication is
language requires
Business risks can usually identified Environments may be so unstable
and assessed that it is extremely difficult to identify
and assess risks
Planning and organizational control The complexity of international trade
systems can be simple and direct often necessitates the adoption of
complex and sophisticated planning,
organization and control systems
 Differences between domestic and
international marketing (continued)
Domestic International
Functional specialization within a International marketing managers require a
marketing department is possible wide range og marketing skills
Distribution and credit control are Distribution and credit control may be
straightforward extremely complex
Selling and delivery Documentation is often diverse and
documentation is routine and complicated due to meeting different
easy to understand border regulations
Distribution channels are easy to Distribution is often carried out by
monitor and control intermediaries, so is much harder to
monitor
Competitors’ behavior is easily Competitors’ behavior is harder to observe,
predicted therefore less predictable
New product development can be New product development must take
geared to the needs of the home account of all the markets the product is
 Applicability of
International Marketing
• Companies cannot stay domestic
and expect to maintain their
markets.
• Companies need to define their
global policies and objectives.
• Companies need to decide on how
much to adapt marketing mix.
• Market entry and market control
costs can be high.
• Product and communication
adaptation costs can be high.
• Dominant foreign firms can
establish high barriers of entry.
 Key elements of the
international marketing mix
Product Price Place Promotion
-Product -choice of pricing -International -Advertising,
adaptation strategy distribution public relations
packaging and -Competitor -Control of and sales
labeling analysis agents promotion
translation of -Discount -Export -Direct marketing
technical structures documentation -Control of
literature -Credit -cargo salespeople
-Quality management insurance -Translation of
management -Delivery terms -Joint-ventures sales literature
-Licensing and -costing and and subsidiaries -Exhibiting
contract budgeting -Marketing
manufacturing research
 What is the MNE/MNC?
Enterprise operating in several countries but managed from
one (home) country. Generally, any firm or group that derives a
quarter of its revenue from operations outside of its home country
is considered a MNC, and may fall into one of the four categories:

• (1) multinational, decentralized firm with strong home country

presence,

• (2) global, centralized firm that acquires cost advantage through

centralized production wherever cheaper resources are available,

• (3) international, firm that builds on the parent firm's technology

or R&D, or

• (4) transnational, firm that combines the previous three

approaches. According to UN data, some 35,000 firms have direct
investment in foreign countries, and the largest 100 of them
control about 40 percent of world trade.
 MNCs (Multinational
Corporations)
• Cons
– Exploitation
– Erosion of a nation’s sovereignty
• Pros
– Power and Prestige
– Social Responsibility
– Marketing Performance
 Characteristics of MNCs
• Definition by size
– Market value
– Sales
– Profits
– Assets
– Number of employees
 Characteristics of MNCs (cont.)
• Definition by structure
– Number of countries in which the firms does
business
– Citizenship of corporate owners and top
managers
 Characteristics of MNCs (cont.)
• Definition by performance
– Commitment of corporate resources to foreign
operations
– Amount of rewards from the commitment
 Characteristics of MNCs (cont.)
• Definition by behavior
– Ethno-centricity
– Poly-centricity
– Geo-centricity
 Behavior/Attitude
• Ethnocentricity
• Orientation toward home country
• Centralization of decision making
• Efficient but not effective
 Behavior/Attitude (cont.)
• Poly-centricity
– Strong orientation to host market
– Decentralization of decision making
– Effective but not efficient
 Behavior/Attitude (cont.)
• Geocentricity
– World orientation
– Centralization + decentralization + coordination
– Efficient and Effective
Coordinating marketing activities

• Deciding to go abroad
• To which markets
• How to enter markets
• Marketing programs
• Marketing organization
 Recognising constraints of the global
environment

• Denotes the use of advertising and marketing

on a global basis.
• Marketing is at the threshold of a new and
exciting era: e-business, e-commerce and e-
marketing
• Business has two basic functions: marketing
and innovation
• New era of competition, demanding customers
• More stakeholders (customers, employees,
media).
• Companies need new set of guidelines,
values and insight
• Marketing is a Strategic Business Concept
• Marketing is too important to be left to the
Marketing Department. (David Packard)
• Formulated, integrated, long-term
• Hold to the responsibilities of customers,
employees, investors
• Advantages, especially if the companies
emphasize selection, availability,
quality, reliability and lower prices.
• Economies of scale.
• Lower marketing and advertising costs
in planning and control. Lower
advertising production costs.
• Exploiting your best ideas on a
worldwide basis.
Deciding How to Enter a Market
• Indirect Export-Thru export and thru
others.
• Direct Export-Handle own exports.
• Licensing-License a foreign company to
use trademark, manufacturing process,
trade secret, or other item for a fee or
royalty.
• Joint Ventures- Join with local investors
• Direct Investment- Direct ownership.
 Joint Ventures-- Join with local
investors to create venture. Coca-
Cola and Nestle joined forces in
“ready to drink” coffee and tea.
• P&G with rival, Fater, in Italy and
Great Britain.
• Whirlpool formed venture with
Dutch electronic group Philip’s on
white-goods business to leapfrog
into European market.
Direct Investment--Ultimate form is
direct ownership of foreign-based
assembly or manufacturing
facilities.
• Can buy part or full interest in a
local company.
 Benefits of International Marketing
The
The merits
meritsof
of global
global marketing
marketing include:
include:

1. Growth of Overseas Market: Economies of scale in production and

marketing can be important competitive advantages for global
companies
2. Sales and Profits: Unifying product development, purchasing, and
supply activities across several countries it can save costs
3. Transfer of experience and know-how across countries through
improved coordination and integration of marketing activities
4. Diversification: Diversity of markets by spreading the portfolio of
markets served brings an important stability of revenues and
operations to many global firms
5. Inflation and Price Moderation – Benefits of Exports-Benefits of
Imports are high.
6. Employment and Standard of Living.