International marketing Definitions, scope and issues

DEFINITIONS ‘the objective is, as in domestic markets, to understand the customer and market needs and strive to meet them with the capabilities the organization has at its disposal’. ‘adapt familiar techniques to unfamiliar circumstances.’ Fifield and Lewis ‘International Marketing Strategy’ 1995

Kotabe and Helsen – orientation framework Type of marketing Domestic marketing Export marketing International marketing Multinational marketing Global marketing Orientation Ethnocentric Polycentric Regiocentric Geocentric

Keegan and Schlegelmilch - business classification Domestic – export focus International – Multi domestic strategy Global/Transnational – globally integrated strategy

Economic background

The world economy - Glossary Gross Domestic Product (GDP) =A country’s total output of goods and services Balance of (merchandise) trade= exports- imports World output=sum of all countries’ GDPs World trade=total exports + imports Disposable income=total income-essential purchases

The world economy - Glossary Foreign Direct Investment (FDI) =Foreign manufacturing/operations located in a host country Portfolio investment=short term foreign investment in equities, commodities, currencies etc These are a key source of financial flows between countries

WORLD TRADE *(exports + imports) and world output, World trade growing at <6%p.a. 12% in 2000 World output growing at <2% p.a. 4% in 2006 * Merchandise

Exports and imports of goods % GDP (2000) Region/countryExportsImports N. America17%(27)23%(20) W.Europe40%(32)40%(40) Japan8%(.4)6%(1) Asia27%(14)23%(14) Latin America6%(12)6%(11) ( )=1948

Share of global exports and imports of services (2000) – top 5 exporters Region/countryExportsImports North America19%14% U.K.7%6% France6%4% Germany6%9% Japan5%8%

Disposable income threshold $10,000 (£6.5k) :virtually no disposable income $20,000 (£11k): considerable purchasing power

Trade Blocs ‘Regional economic arrangements’ (from free trade to economic union)

Big Emerging Markets (BEMs) Chinese Economic Area (CEA) China and HK, Taiwan Association of Southeast Asian Nations (ASEAN) Indonesia, Brunei, Malaysia, Singapore, Thailand, the Philippines, Vietnam Customs union: low internal tariffs and common external tariff

Other BEMs India, S. Korea, Mexico, Brazil, Argentina, S. Africa, Poland, Turkey.

‘Regional economic arrangements’ (from free trade to economic union) North American Free Trade Area (NAFTA) US, Canada and Mexico Low internal tariffs, with local content laws

Mercado Cooperativo Sur (MERCOSUR):Brazil, Argentina, Uruguay, Paraguay Free trade area

European Union (EU) Germany, France, Italy, UK, Spain, Greece, Portugal, Belgium, Netherlands, Austria, Sweden, Denmark, Finland, Ireland, Luxemburg, New members from 1 May 2004 Cyprus, Czech Rep., Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia. Towards monetary union

TODAY’S ECONOMIC DRIVERS Technology which impacts on: Communications: Foreign travel Global advertising Web-based trading Costs of production Customisation Access to information Logistics

TODAY’S ECONOMIC DRIVERS De-regularization and privatisation:

The Global Village - Cultural convergence Evidenced by: Emergence of global market segments eg young, urban professional: Nike trainers (US, made in China) Toshiba laptops (Japanese) Nokia mobiles (Finnish) AOL ISP (US) BMW car (German)

The Global Village (cont.) This has led to: Growth in product standardization (see Levitt 1983) Growth in ‘global’ brands Mergers, acquisitions and strategic alliances: Swatch and Mercedes (electric car) Ford and Jaguar cars AOL and Time Warner

THE KEY QUESTIONS Do we go international/global? Where do we operate? How do we enter and operate? What do we offer? Should it be adapted? What are the implications for the marketing mix?

An analytical framework Information areasIssuesDecisions ConsumersSegment profiles: size and relevance Fit? Profitable? Suitable? CompanyS&W, objectivesCompetence? Entry strategy? Standardise? CountrySocio/econ, logistics, stability Entry strategy? Standardise? Risk? CultureBeliefs, behaviour, symbols Standardise or adapt? CurrencyStabilityPricing, profits CompetitionWho (S&W), 5 Forces?Competitive strategy (Porter, Hamel and Prahalad) Other?