The Scope and Challenge of International Marketing Chapter 1

Globalization of Markets Global Perspective: Boeing Company example Peace Works company example Recent events that have impacted international marketing High tech and dot.com company bust in early 2000’s September 11th terrorist attacks in U.S. Wars in Afghanistan and Iraq

Globalization of Markets 4 Prevailing trends that have the most impact on international business in the future: 1. Growth of the World Trade Organization and region free trade areas (NAFTA, European Union..) 2. Trend of developing countries (such as Asia, Latin America, Eastern Europe) accepting the “free market system” 3. Impact of the internet and other global media companies (CNN) 4. Mandate for companies to properly manage resources

Globalization of Markets Why international marketing is so important: Companies can no longer ignore the effects of internationally marketing Competition no longer exists just from domestic companies (exhibit 1.1 pg. 7) In order to sustain profitability and growth margins of the past, companies have to look for alternative methods of marketing their products and services “In a study conducted on U.S. manufacturing companies of all sizes, it was found that multinational companies outperformed their strictly domestic U.S. counterparts by more than twice as fast in sales and earned much greater returns on equity and assets..” (exhibit 1.2 pg. 9)

Globalization of Markets Definition of International Marketing: “The performance of business activities designed to plan, price, promote and direct the company’s flow of goods and services to consumers or users in more than one nation for a profit” (4 P’s) What is the difference between marketing domestically and internationally Marketing concepts are universal (goal is to make a profit) Difference is that in international marketing ALL environments have to be taken into consideration when the marketing plan is developed and executed Must consider the legal environment, governmental controls, climate & weather, cultural beliefs, buyer behavior… (uncontrollable elements)

International Marketing Task The International Marketing Task (exhibit 1.3 pg. 10) Marketing Plan (controllable) Price, Promotion, Product, Place (distribution) Domestic Environment (uncontrollable) Political/legal, competition, economy Foreign Environment (uncontrollable) Structure of distribution, geography and infrastructure, culture, political/legal, economy, competition, level of technology…

International Marketing Task Other Factors within the Foreign Environment to consider: Level of technology Crossing Borders 1.3 Political and legal issues Culture

International Marketing Task Importance of “uncontrollable elements” In order to succeed internationally a foreign company must understand the impact of the uncontrollable elements that make up that country’s culture “Cultural understanding is like an iceberg – we are not aware of nine-tenths of it” In order to be successful in adapting to the international markets, the market plan needs to incorporate strategies to anticipate as much of the uncontrollable factors that influence both the foreign and domestic markets and allow for maximum flexibility to adjust for future changes

International Marketing Task Obstacles to success in international marketing: “SRC” – Self-reliance criterion & ethnocentrism: Using one’s culture, values, experiences as a basis for decisions in international situations By reacting to situations in this manner, cultural differences are ignored, and behavior might be offensive The less ego-centric a company is, the greater success it will have in marketing it’s products and services

Developing Global Awareness To be globally aware, a company must have the following Objectivity Tolerance of cultural differences Knowledge of cultures, history, world market potential, and global economic, social, and political trends

Stages of International Marketing Involvement 1. No Direct Foreign Marketing Company does not actively pursue customers in foreign markets, but receives them thru unintended channels Products are bought abroad through domestic wholesalers/distributors, website on the internet 2. Infrequent Foreign Marketing Company sells to foreign markets only when a temporary surplus of product exists Once surplus is gone, foreign activity is gone Few companies fit this model because of the need to develop long term relationships in foreign countries

Stages of International Marketing Involvement 3. Regular Foreign Marketing Companies produce their products and services to primarily sell domestically, but also internationally Through domestic/foreign middlemen, sales force in foreign countries 4. International Marketing Companies are fully engaged in international marketing strategies Companies are now international or multi-national

Stages of International Marketing Involvement 5. Global Marketing Change from its marketing activities to all activities focused in a global perspective In most cases companies sales revenues are more than ½ of its total revenues Treat the world as one market Market segment is no longer focused on national borders, rather such things as income levels, usage patterns, or other factors are looked across borders

Strategic Approaches to Marketing Internationally 1. Domestic Market Extension Orientation International markets are secondary to its domestic markets 2. Multidomestic Market Orientation Each country has a specific and separate marketing plan to adjust to differences 3. Global Marketing Orientation Marketing activities are global Strives for efficiencies of scale through standardization