Transcript The Scope and Challenge of International Marketing

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