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International Marketing
Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved.
Chapter 4 Objectives
1. Understand the importance of international
marketing and its opportunities and
challenges.
2. Recognize the effect of the global
environment on international marketing
activities.
3. Understand the process of international
market selection.
Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved.
Chapter 4 Objectives
4. Recognize the process of
internationalization and the different forms
of market entry.
5. Comprehend the international adjustment of
the marketing mix.
6. Understand the steps necessary to
implement an international marketing
strategy.
Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved.
The Nature of International Marketing
•
International marketing—process of
planning and conducting transactions
across national borders to create
exchanges that satisfy the objectives of
individuals and organizations. Four
orientations or business philosophies.
Objective 1
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The Nature of International Marketing
1. How will my product fit into the
international market?
2. What marketing adjustments are or will
be necessary?
3. What threat from global competition
should I expect?
4. How can these threats be turned into
opportunities?
Objective 1
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Opportunities in International Marketing
•
By integrating knowledge from around
the globe, an international firm can build
and strengthen its competitive position.
Objective 1
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Challenges in International Marketing
•
Most firms and individuals are affected
directly or indirectly by economic and
political developments that occur in the
international marketplace.
Objective 1
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The International Marketing Environment
• Sociocultural Environment
– Includes languages, values, and attitudes.
– Marketing managers need to account for
these cultural factors when developing
marketing strategies.
• Change agents—try to impress on a
local consumer the need to adopt a new
product.
Objective 2
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The International Marketing Environment
•
Differences in cultural lifestyle can be
accounted for by four dimensions of
culture.
1)
2)
3)
4)
Degree of individualism
Level of equality
Uncertainty avoidance
Material achievement
Objective 2
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The International Marketing Environment
•
How culture can be used as a
marketing tool (see Figure 4.2)
1.
2.
3.
4.
5.
Embrace local culture
Build relationships
Employ locals to gain cultural knowledge
Help employees understand you
Adapt products and processes to local
markets
6. Coordinate by region
Objective 2
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The International Marketing Environment
•
Political and Legal Factors
– Play a critical role in international
marketing activities
– World Trade Organization (WTO)—the
institution that administers international
trade and investment accords.
•
•
Common Law—based on tradition and
depends less on written statutes and codes
than on precedent and custom
Code Law—based on a comprehensive set of
written statutes
Objective 2
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Selecting an International Market
•
•
Screening and Identifying
International Markets
Figure 4.4
– Stage 1: Conduct preliminary screening.
– Stage 2: Determine total market
potential.
– Stage 3: Estimate sales potential.
– Stage 4: Select the optimal segment
within the target market.
Objective 3
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Selecting an International Market
•
Choosing a Concentration or
Diversification Strategy
– Diversification Strategy—market
development strategy that involves
expansion to a relatively large number of
markets
– Concentration Strategy—focuses on a
small number of markets
Objective 3
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The Internationalization Process
•
Management’s Role in International
Expansion
– Managerial commitment is crucial
because foreign market penetration
requires a vast amount of market
development activity, sensitivity toward
foreign environments, research, and
innovation.
Objective 4
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The Internationalization Process
•
Motivation to Go Abroad
PROACTIVE
REACTIVE
Profit advantage
Competitive pressures
Unique products
Technological advantage
Overproduction
Declining domestic sales
Exclusive information
Excess capacity
Economies of scale
Saturated domestic markets
Proximity to customers and
ports
Objective 4
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Alternative Entry Strategies
•
Indirect Exporting and Importing
–
•
•
International intermediary—deals indirectly with
foreign customers or firms
Direct Exporting and Importing
International Intermediaries
–
–
Export management companies (EMCs)—
specialize in performing international business
services as commission representatives or as
distributors
Trading company—marketing intermediary that
undertakes exporting, importing, counter
trading, investing, and manufacturing
Objective 4
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Alternative Entry Strategies
•
Licensing
– Licensing agreement—one firm permits
another to use its intellectual property
for compensation, usually a royalty
•
Franchising
– Franchising is the granting of the right
by a parent company to another
independent entity (the franchisee) to do
business in a prescribed manner
Objective 4
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Alternative Entry Strategies
•
Foreign Direct Investment
– Involves buying property and
businesses in foreign nations
•
Reasons for Foreign Direct
Investment
– Marketing considerations and corporate
desire for growth are major reasons
Objective 4
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Alternative Entry Strategies
•
A perspective on Foreign Direct
Investment
– Governments and individuals praise
foreign direct investors for bringing
capital, economic activity, and
employment, as investors are seen as
key transferers of technology and
managerial skills
Objective 4
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Alternative Entry Strategies
•
Types of Ownership
–
–
–
–
Full ownership
Joint ventures
Strategic alliances
Contractual arrangements
Objective 4
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Tailoring the International Marketing Mix
•
Use one of the three following
strategies when determining
adjustments to the marketing mix:
1. Standardized approach
2. Multidomestic approach
3. Globalization approach
Objective 5
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Tailoring the International Marketing Mix
•
Product
– Design
– Branding
– Packaging
•
•
Distribution
Pricing
Objective 5
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Implementing Marketing Programs Worldwide
•
Management Processes
– Globalization requires transfer of
information both between the
headquarters and country organizations
and within the country organizations
themselves
– Substantial degree of centralization in
marketing decision making for
globalization
Objective 6
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Implementing Marketing Programs Worldwide
•
Organization Structure
– Established global or regional product
managers and their support groups at
headquarters focuses on customers
rather than the traditional country to
country approach
Objective 6
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