Ppt Ch01 Kotable3e

Chapter 1INTRODUCTION TO

INTERNATIONAL MARKETING

Prepared by Robin RobertsGriffith University

Learning objectives

After studying this chapter, you should be able to:• Describe the growth of Asian markets and

the implication for global trade and international marketing

• Explain the aspects of the international trade and business environment that have made understanding international marketing imperative

Learning objectives

• Discuss the evolution of global marketing• Outline key processes involved in planning,

implementing and monitoring an international marketing strategy

• Understand the comparative advantage, international product cycle and internalization theories in relation to international trade and investment

Overview

• Increasingly global environment for today’s marketing manager

• However, not a new phenomenon– The Silk Road– Trade Routes from Ancient Rome

• The focus should be not the nature but the rate and type of change – US$12.5 trillion in world trade in 2005

vs. US$6.5 trillion in 1998

The Asian century

• Historically for most of the 20th century the triad regions have dominated world trade– North America, Western Europe and Japan

• Increasingly, it is the Big Emerging Markets (BEMs) which are now having an impact– CEA, India, South Korea, Mexico, Brazil, Argentina,

South Africa, Poland, Turkey & ASEAN

The Asian century

• Increasing amount of competition coming from the BEMs

• There is a desire for modernity in these markets which fuels their competitiveness and growth

• Infrastructure and energy needs will prove to be problematic as they grow

Why understanding international marketing is imperative

1. Saturation of domestic markets forces companies to look elsewhere

2. The nature of competition has changed– in terms of market share, country source

and global reach

Why understanding international marketing is

imperative 3. International competition also brings

about global cooperation– partnerships between Toshiba and Sony,

from Japan with US computer manufacturer IBM

4. The impact that the internet and e-business has made on the global business landscape

5. Changing nature of the world economy– Shift in the world’s largest companies

• Less US and Japanese centric– Consider the make up of the largest 100

companies in the world

6. Domestic companies cannot avoid competitive pressure from globally oriented firms

Why understanding international marketing is

imperative

Top 100 largest organisations

Table 1.1The world’s 100 largest organisations, by country,

1970 - 2009

International trade versus international business• International trade– The process of exporting and importing

goods between a nation and other countries in the world

• International business– A combination of international trade and

foreign production of goods for sale

Evolution of international and global marketing

• Shift in management paradigms– Traditional paradigm

rooted in US management theory

• More of a ‘global approach’ now

• Marketing strategies are based on an organisation’s degree of experience and nature of operations in international markets– Organisations do, however,

evolve over time

Evolution of international and global marketing

Five Stages

1.Domestic marketing2.Export marketing3. International (country-by-country)

marketing4.Multinational (region-by-region)

marketing5.Global marketing

Evolution of global marketing

Evolution of internationaland global marketing

Domestic marketing

• An approach which organisations focus on the domestic market and domestic competition only– Ethnocentric– Product development for home country

customers– Marketing mix decisions made at head office

level

Evolution of international and global marketing

Domestic marketing examples:

• Your local pizza shop

• Your car mechanic

• A national bank that does not operate outside the boundaries of the country

Evolution of international and global marketing

Export marketing

• Organisations sell their product or service directly or indirectly to overseas buyers– Ethnocentric– Product development mainly determined by

home market needs– Marketing mix decisions made at head office

level

Evolution of international and global marketing

Export marketing examples:

• A clothing company that exports to the country adjacent to it

• A food company that exports its produce to another country without changing anything about the product

Evolution of international and global marketing

International marketing(country-by-country)

•Marketing functions are adapted to foreign market demands– Polycentric– Local product development based on local

needs– Marketing mix decisions made in each country

Evolution of international and global marketing

International marketing examples:• A food marketer who changes the taste

of the product to suit local tastes• A retailer who adapts their stores to

allow for aesthetics and tastes of locals – Can also include ‘multi-domestic’• Foreign subsidiaries operating independently of

one another without control from the organisations head office

Evolution of international and global marketing

Multinational marketing(region-by-region)

•The organisation realises economies of scale by standardising operations on a regional basis– Regiocentric– Product planning is standardised within

region but not across– Marketing mix decisions made regionally

Evolution of international and global marketing

Multinational marketing examples:

• A bookstore chain that makes adjustments to its store layout and product range within (rather than across) regions

• A jewellery store that uses a different celebrity endorsement in Asian markets compared to North American markets

Evolution of international and global marketing

Global Marketing

• An organisation strives for efficiencies of scale by developing a standardised marketing mix across national, regional and global markets– Geocentric– Global products with local variations– Marketing mix decisions made jointly with

mutual consultation

Evolution of international and global marketing

Global marketing examples:

• A global hair care brand adjusts the product formula to allow for different conditions in different countries

• A global advertising agency maintains its global branding but adjusts its mix to allow for local conditions such as access to media

Evolution of international and global marketing• Global marketing – key concerns

– Impact of environmental factors on global marketing

– Impact of the Internet on global marketing

Evolution of international and global marketing

• Global marketing — Impact of Environmental Factors– Location

• Singapore and its central location in Asia

– Culture• Halal products produced in Dubai or Pakistan

– Availability of human resources• Education in Bangalore, India

– Geographic/physical landscape• Hong Kong and its deep water port

International marketing planning

and strategy development• Changing the controllable variables

– The ‘Marketing Mix’

• Understanding the need to fit the strategy to the environment

• The necessity for effective planning

– Same concerns as domestic marketing planning, except the major interest is with international marketing variables

Theories of international trade and

the multinational organisation• Comparative advantage theory– English economist, David Ricardo– A country can gain from engaging in trade even if it

has an absolute advantage or disadvantage

• Absolute advantage – The situation in which one region can produce

goods with lower unit labour requirements than any other region and so is able to export these goods

• Principles of international trade1. Countries benefit from international trade2. International trade increases worldwide production

through specialisation3. Exchange rates are determined primarily by traded

goods

• Factor endowment theory– Based on notions that nations possess different

amounts of land, labour, capital that determine a nation's comparative advantage

Theories of international trade and

the multinational organisation

• International product cycle theory– Explains a realistic, dynamic change in

international competition over time and place through:• Economies of scale and scope• Technological gap• Preference similarity

Theories of international trade and

the multinational organisation

Summary

You should now have an understanding of:• The growth of Asian markets and

the implication for global trade and international marketing

• The aspects of the international trade and business environment that have made understanding international marketing imperative

• The evolution of global marketing

Summary

• The key processes involved in planning, implementing and monitoring an international marketing strategy

• The role of comparative advantage, international product cycle and internalization theories in relation to international trade and investment