The Scope and Challenge of International Marketing Chapter 1

Greatest Lesson in Marketing THE CONSUMER IS KING!!!!!!

The Globalization of Business Why has the globalization of business occurred? What are the components needed to make a global market? Why is it necessary for many firms to look to the world for its business? What challenges occur with the globalization of business?

International Marketing Defined Cateora and Graham define international marketing as “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 for a profit.”

Definition -2 “ The process of planning and conducting transactions across national borders to create exchanges that satisfy the objectives of individuals and organizations”.

Key international marketing questions faced by a firm: How will my product or service fit into the international market? What marketing adjustments are or will be necessary? What global competitive threats should I expect? How can I work with these threats and turn them into opportunities? What are my strategic global alternatives?

Trade = Exports + Imports of all goods and services between countries If exports from a country are greater than imports, it results in trade surplus If exports from a country are lower than imports, it results in trade deficit USA has trade deficit in merchandise (goods) trade and trade surplus in services Overall trade deficit for USA in 1999 was over $268 billions. Monthly trade statistics influence stock market fluctuations. One billion $ exports create over 20,000 jobs in any year.

The composition of merchandise exports is shifting from commodities to manufactured goods Domestic Policy Repercussions One out of every 3 U.S farm acres is producing for export One out of 6 U.S manufacturing jobs produces for export $1 out of $7 in U.S sales goes abroad 1 out of 3 cars, 9 out of 10Tvs, 2 out of 3 suits, and every VCR sold in the U.S is imported. Travel and tourism is the #1 source of U.S foreign exchange. $1 out of $4 of U.S bonds and notes is issued to foreigners. U.S moved from world’s net creditor to world’s debtor

The International Marketing Task The company that wishes to do international marketing must operate on three different planes simultaneously. Some of these planes are directly under the control of the marketer, while other planes may only partially controllable. These planes are related to the company environment (internal), the domestic environment (parent country), and the foreign environment (international).

Marketing Decision Factors These factors are found within the company environment where the marketer has control over them. These factors are:’(4 P’s) Price Promotion Product Place (Channels of Distribution)

Domestic Environment Factors These factors are related to how the domestic environment affects your marketing decisions. These tend to be more uncertain to the marketer, but on some level may still be controllable.

Domestic Environment Factors parent country These factors are: Political/Legal Forces Economic Climate Competitive Structure

Foreign country Environment Factors These factors are related to how the foreign environment affects your marketing decisions. These tend to be the most uncertain to the marketer, and is very difficult to be controlled.

Foreign Environment Factors These factors are: Political/Legal Forces Cultural Forces Geography and Infrastructure Structure of Distribution Level of Technology Competitive Forces Economic Forces

Self-Reference Criterion The Self-Reference Criterion (SRC) is when you as the marketer unconsciously expect that everyone is like you. You expect that they have: The same cultural values Experiences Knowledge

Ethnocentrism (home country orientated) This is the idea that things done in your culture is the correct or best way of doing things. You tend not to look through the eyes of the foreign consumer. Eg KUCH KAR DEKHNEY KI PYAS HEY, DEW NA KYA TO PHIR KYA JIYA, PEPSIFY KARO GAY, BURRRRR…

The Problem with SRC and Ethnocentrism SRC (self reference criterion) Letting these two issues cloud your judgment can cause you to not understand the other culture. This in turn will make it so you cannot provide the product that the consumer wants.

International Marketing Stages No Direct Foreign Marketing here company doesn’t actively generate customers outside national boundaries. Products may reach foreign markets indirectly. (eg gifts to friends, or if a person moves abroad will take products from parent country with him) Infrequent Foreign Marketing Usually a company markets in foreign countries when supply is greater than domestic demand. Here as domestic demand increases and surpluses, foreign sales activity is withdrawn.

International Marketing Stages Cont. Regular Foreign Marketing Some production in the company is targeted to foreign markets. Here companies have permanent productive capacity devoted to the production of goods for foreign markets. International Marketing These companies tend to have production both domestic and abroad. Companies in this stage are fully committed and involved in international marketing activities.

International Marketing Stages Cont. Global Marketing This is when companies treat foreign and domestic markets roughly the same. At this stage, companies treat the world, including their home market, as one market Usually the headquarters of the company can be located anywhere in the world.

Strategic Orientation EPRG schema; (Ethnocentric, Polycentric, Regiocentric, and Geocentric orientation) Domestic Market Extension Orientation The view of the company is that foreign markets are secondary to the domestic market. (ethnocentric) Multi-domestic Market Orientation Companies with this strategy have a country-by-country marketing plan, with separate strategies for each country. (Polycentric)

Strategic Orientation Cont. Global Marketing Orientation Here marketing activity is global and its coverage is the world and the product is standardized. Identifying groups of prospective buyers with similar needs as a global market segment. (Regiocentric – Geocentric) These companies tend to develop global marketing strategies which emphasize economies of scales.

Stages of domestic to global evolution Management emphasis Stage one Domestic Stage two International Stage three Multinational Stage four Global Focus Domestic Ethnocentric Polycentric Geocentric Marketing strategy Extension Adaptation Structure International Worldwide area Adaptation creation matrix/mixed Management style Centralized top down Decentralized bottom up Integrated Manufacturing stance Mainly domestic Host country Lowest cost worldwide Investment policy Domestic used worldwide Mainly in each host country Cross subsidization Performance evaluation Domestic market share Against home country market share Each host country market share Worldwide

Global localization Benefits of international marketing Survival “Think globally act locally” Pizza hut offering chicken tikka pizza Benefits of international marketing Survival Growth opportunities Sales and profit Diversification of risk Employment creation