International Marketing Chap 1

8/9/2019 International Marketing Chap 1

http://slidepdf.com/reader/full/international-marketing-chap-1 1/29

I n t e r n a t i o n a l M a r k e t i n gI n t e r n a t i o n a l M a r k e t i n g

The Scope and

Challenge

of InternationalMarketing

Chapter 1

P h i l i p R. C a t e o r a

J o h n L . G r a h a m

McGraw-Hill/Irwin International Marketing Iftekhar Amin Chowdhury (IAC)



1-2

Foreign Acquisitionsof U.S. Companies

Foreign Acquisitionsof U.S. Companies

Exhibit 1.1



1-3

Selected U.S. Companiesand Their International Sales

Selected U.S. Companiesand Their International Sales

Exhibit 1.2



1-4

International MarketingInternational Marketing

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 aprofit

Multinational process of planning andexecuting the conception, pricing, promotion,and distribution of ideas, goods, and servicesand to create exchanges that satisfyindividual and organizational objectives



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The International Marketing TaskThe International Marketing Task

Exhibit 1.3



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Environmental AdaptationEnvironmental Adaptation

Ability to effectively interpret the influence andimpact of the culture in which you hope to dobusiness

± Cultural adjustments

Establish a frame of reference

Avoid measuring and assessing markets againstthe fixed values and assumptions of your own

culture



1-7

Environmental Adaptation (Examples)Environmental Adaptation (Examples)

Color of Mourning

- Westerner: Black (White considers bridal dress)

- Easterner: White

Raise a hand and make a circle with the thumb and

forefinger (like zero)

- In US: OK

- In France: Zero / Worthless- In Japan: Money

[See the photographs at Page 14]



1-8

The Self -Reference Criterionand Ethnocentrism

The Self -Reference Criterionand Ethnocentrism

The key to successful international marketing isadaptation to the environmental differencesfrom one market to another

Primary obstacles to success in internationalmarketing

± SRC

± Associated ethnocentrism



1-9

SRC and EthnocentrismSRC and Ethnocentrism

SRC is an unconscious reference to

± One¶s own cultural values, experiences, andknowledge as a basis for decisions

Dangers of the SRC

± Failing to recognize the need to take action

± Discounting the cultural differences that exist amongcountries

± Reacting to a situation in an offensive to your hosts Ethnocentrism

± Nation that one¶s own culture or company knows best



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Ethnocentrism and the SRC can influence anevaluation of the appropriateness of adomestically designed marketing mix for aforeign market

The most effective way to control the influenceof ethnocentrism and the SRC is to recognizetheir effects on our behavior

SRC and EthnocentrismSRC and Ethnocentrism



1-11

The Self -Reference Criterion andEthnocentrism

(E

xamples)


(E

xamples)

Communication Distance (American Vs Asian)

Refuse the hospitality (American Vs Asian)

Real Example: US experience regarding ³Esso´(The brand name of gasoline)«in Japan, itmeans µstalled car¶.



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(E

xamples)


(E

xamples)Successful Stories:

1. A British Manufacturer

In America: Cookies

In Japan: Chocolate Biscuits (McVitie)

2. Unilever

In UK: Paper pack and big in size

In Brazil: Plastic pack and small in size3. McDonald¶s

In America and Europe: Big Mac (with beef patties)

In India: Maharaja Mac (with mutton patties)



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Frameworkfor Cross-cultural Analysis


1. Define business problem or goal

Home-country vs. foreign-country cultural traits,habits, or norms

Consultation with natives of the target country

2. Make no value judgments

3. Isolate the SRC influence

Examine it carefully to see how it complicates theproblem

4. Redefine the problem

Without SRC influence

Solve for the optimum business goal situation



1-14


(Real Story)


(Real Story)

Story of an American CEO, who was posted in

Japan and changed the meeting schedule«

What happened ultimately??????



1-15

Developing a Global AwarenessDeveloping a Global Awareness

Tolerance of cultural differences:

± Understanding cultural differences and accepting and

working with others whose behavior may be differentfrom yours

Knowledge of cultures, history, world market

potential, and global economic, social, andpolitical trends



1-16

Approaches to Global Awareness Approaches to Global Awareness

Select individual managers specifically for their demonstrated global awareness

Develop personal relationships in other countries

Have a culturally diverse senior executive staff or board of directors



1-17

Stages of InternationalMarketing InvolvementStages of InternationalMarketing Involvement

No direct foreign marketing

Infrequent foreign marketing

Regular foreign marketing

International marketing

Global marketing



1-18

No Direct Foreign MarketingNo Direct Foreign Marketing

Products reach foreign markets indirectly

± Trading companies

± Foreign customers who contact firm ± Wholesalers

± Distributors

± Web sites

Foreign orders pique a company¶s interest toseek additional international sales



1-19

Infrequent Foreign MarketingInfrequent Foreign Marketing

Caused by temporary surpluses

± Variations in production levels

± Increases in demand

Firm has little or no intention of maintainingcontinuous market representation

± Foreign sales decline when demand or surplusdecreases

± May withdraw from international markets Little or no change in company organization or

product lines



1-20

Regular Foreign MarketingRegular Foreign Marketing

Firm has production capacity devoted to foreignmarkets

Firm employs domestic or foreign intermediaries

± Uses its own sales force ± Sales subsidiaries in important markets

Products allocated or adapted to foreign marketsas demand grows

F

irm depends on profits from foreign markets

Example: Meter-Man (Producer of agricultural measuring devices)



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Regular Foreign MarketingRegular Foreign Marketing

Director of Sales and Marketing of Meter -Manquoted ±

³When you start exporting, you say toyourself, this will be icing on the cake; butnow, I say going international has becomecritical to our existence.´



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International MarketingInternational Marketing

Companies are fully committed and involved ininternational marketing activities. This generally

entails not only the marketing but also theproduction of goods outside home country.

Example: The story of Fedders (Largestmanufacturer of Air conditioner in US)in China (Sales increased from 5 lacsto 4 million in five years)



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Global MarketingGlobal Marketing

Company treats world, including home marketas one market

Market segmentation decisions no longer focused on national borders

± Defined by income levels, usage patterns, or other factors

More than half of revenues come from abroad Organization takes on global perspective



1-24

Strategic OrientationStrategic Orientation

Domestic market extension orientation

Multidomestic market orientation

Global market orientation



1-25

Domestic Market OrientationDomestic Market Orientation

International operations viewed as secondary

Prime motive is to market excess domesticproduction

Firm¶s orientation remains basically domestic

Minimal efforts are made to adapt product or marketing mix to foreign markets

F

irms with this approach are classified asethnocentric

Example of Meter-Man



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Multidomestic Market OrientationMultidomestic Market Orientation

Companies have a strong sense that foreigncountry markets are vastly different

Market success requires an almost independent

program for each country ± Separate marketing strategies (mostly polycentric) ± Subsidiaries operate independently of one another in

establishing marketing objectives and plans ± Products are adapted for each market

Control is decentralized

Example of Fedders



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Global Market OrientationGlobal Market Orientation

Company guided by global marketing orientation

± Marketing activity is global

± Market coverage is the world

Firm develops a standardized marketing mixapplicable across national boundaries

± Markets are still segmented

± Each country or region is considered side by side witha variety of other segmentation variables

± Fits the regiocentric or geocentric classifications



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Global Market Orientation(Example)

Global Market Orientation(Example)

McDonald¶s:

± Process is standardized in every country ± Logo is same

± Most of the advertisements are similar ± Store decoration and layout almost alikeBUT

± Wine in France and Beer in Germany ± A Filipino Style spicy burger in Manila

± Pork burgers in Thailand

P&G pursue a global strategy for disposable diapers,but a multidomestic strategy in Asian markets for detergents. (The strategy differs product to product)



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The Orientationof International Marketing

The Orientationof International Marketing

An environmental/cultural approach tointernational strategic marketing

Intended to demonstrate the unique problems of international marketing

Discussion of international marketing ranges

from the marketing and business practices of small exporters to the practices of globalcompanies

International Marketing Chap 1

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