Transcript File - BBA Group A 2010

The Scope and Challenge of
International Marketing
Chapter 1
1
Greatest Lesson in Marketing
THE CONSUMER IS KING!!!!!!
2
The Globalization of Business




Why has the globalization of business
occurred?
What are the components needed to
make a global market?
Why is it necessary for many firms to
look to the world for its business?
What challenges occur with the
globalization of business?
3
International Marketing
Defined

Cateora and Graham define
international marketing as “the
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 a profit.”
4
Definition -2

“ The process of planning and
conducting transactions across national
borders to create exchanges that satisfy
the objectives of individuals and
organizations”.
5
 Key international marketing questions faced by
a firm:
• How will my product or service fit into the international
market?
• What marketing adjustments are or will be necessary?
• What global competitive threats should I expect?
• How can I work with these threats and turn them into
opportunities?
• What are my strategic global alternatives?

Trade = Exports + Imports of all goods and services
between countries
• If exports from a country are greater than imports, it results
in trade surplus
• If exports from a country are lower than imports, it results in
trade deficit
• USA has trade deficit in merchandise (goods) trade and trade
surplus in services
• Overall trade deficit for USA in 1999 was over $268 billions.
• Monthly trade statistics influence stock market fluctuations.
• One billion $ exports create over 20,000 jobs in any year.
• The composition of merchandise exports is shifting from
commodities to manufactured goods
 Domestic Policy Repercussions
• One out of every 3 U.S farm acres is producing for export
• One out of 6 U.S manufacturing jobs produces for export
• $1 out of $7 in U.S sales goes abroad
• 1 out of 3 cars, 9 out of 10Tvs, 2 out of 3 suits, and every VCR
sold in the U.S is imported.
• Travel and tourism is the #1 source of U.S foreign exchange.
• $1 out of $4 of U.S bonds and notes is issued to foreigners.
• U.S moved from world’s net creditor to world’s debtor
The International Marketing
Task

The company that wishes to do international
marketing must operate on three different
planes simultaneously.



Some of these planes are directly under the
control of the marketer, while other planes may
only partially controllable.
These planes are related to the company
environment (internal), the domestic environment
(parent country),
and the foreign environment (international).
9
Marketing Decision Factors


These factors are found within the
company environment where the
marketer has control over them.
These factors are:’(4 P’s)




Price
Promotion
Product
Place (Channels of Distribution)
10
Domestic Environment Factors


These factors are related to how the
domestic environment affects your
marketing decisions.
These tend to be more uncertain to the
marketer, but on some level may still be
controllable.
11
Domestic Environment Factors
parent country

These factors are:



Political/Legal Forces
Economic Climate
Competitive Structure
12
Foreign country Environment
Factors


These factors are related to how the
foreign environment affects your
marketing decisions.
These tend to be the most uncertain to
the marketer, and is very difficult to be
controlled.
13
Foreign Environment Factors

These factors are:







Political/Legal Forces
Cultural Forces
Geography and Infrastructure
Structure of Distribution
Level of Technology
Competitive Forces
Economic Forces
14
Self-Reference Criterion


The Self-Reference Criterion (SRC) is
when you as the marketer unconsciously
expect that everyone is like you.
You expect that they have:



The same cultural values
Experiences
Knowledge
15
Ethnocentrism
(home country
orientated)



This is the idea that things done in your
culture is the correct or best way of
doing things.
You tend not to look through the eyes
of the foreign consumer.
Eg KUCH KAR DEKHNEY KI PYAS HEY, DEW NA KYA TO PHIR
KYA JIYA, PEPSIFY KARO GAY, BURRRRR…
16
The Problem with SRC and
Ethnocentrism


SRC (self reference criterion)
Letting these two issues cloud your
judgment can cause you to not
understand the other culture.

This in turn will make it so you cannot
provide the product that the consumer
wants.
17
International Marketing Stages

No Direct Foreign Marketing
here company doesn’t actively generate
customers outside national boundaries.
Products may reach foreign markets indirectly.
(eg gifts to friends, or if a person moves abroad will
take products from parent country with him)


Infrequent Foreign Marketing


Usually a company markets in foreign countries
when supply is greater than domestic demand.
Here as domestic demand increases and
surpluses, foreign sales activity is withdrawn.
18
International Marketing Stages
Cont.

Regular Foreign Marketing



Some production in the company is targeted to
foreign markets.
Here companies have permanent productive
capacity devoted to the production of goods for
foreign markets.
International Marketing

These companies tend to have production both
domestic and abroad. Companies in this stage are
fully committed and involved in international
marketing activities.
19
International Marketing Stages
Cont.

Global Marketing


This is when companies treat foreign and
domestic markets roughly the same.
At this stage, companies treat the world,
including their home market, as one
market
Usually the headquarters of the company
can be located anywhere in the world.
20
Strategic Orientation
EPRG schema;
(Ethnocentric, Polycentric, Regiocentric, and
Geocentric orientation)

Domestic Market Extension Orientation


The view of the company is that foreign
markets are secondary to the domestic
market. (ethnocentric)
Multi-domestic Market Orientation

Companies with this strategy have a
country-by-country marketing plan, with
separate strategies for each country.
(Polycentric)
21
Strategic Orientation Cont.

Global Marketing Orientation

Here marketing activity is global and its
coverage is the world and the product is
standardized. Identifying groups of
prospective buyers with similar needs as a
global market segment.
(Regiocentric – Geocentric)

These companies tend to develop global
marketing strategies which emphasize
economies of scales.
22
Stages of domestic to global
evolution
Management
emphasis
Stage one
Domestic
Stage two
International
Stage three
Multinational
Stage four Global
Focus
Domestic
Ethnocentric
Polycentric
Geocentric
Marketing
strategy
Domestic
Extension
Adaptation
Extension
Structure
Domestic
International
Worldwide area
Adaptation creation
matrix/mixed
Management
style
Domestic
Centralized top down
Decentralized bottom
up
Integrated
Manufacturing
stance
Mainly
domestic
Mainly domestic
Host country
Lowest cost
worldwide
Investment
policy
Domestic
Domestic used
worldwide
Mainly in each host
country
Cross subsidization
Performance
evaluation
Domestic
market share
Against home country
market share
Each host country
market share
Worldwide
23
Global localization
“Think globally act locally”
Pizza hut offering chicken tikka pizza
Benefits of international marketing
•Survival
•Growth opportunities
•Sales and profit
•Diversification of risk
•Employment creation
24