Scope, Concepts, and Drivers of International Marketing

Dana-Nicoleta Lascu
Chapter 1

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Chapter Objectives
Define international marketing levels of international involvement. company orientations and philosophies

toward international marketing. that direct firms toward international markets.

environmental and firm-specific drivers

obstacles to successful international ventures.

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Importance of International Marketing

International expansion helps firm:

Keep pace with competition Reach a larger market Reap higher profits Prolong the lifecycle of their products

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Levels of International Marketing

Domestic Marketing
Least international commitment Domestic focus

Export Marketing
Limited international commitment

International Marketing
Substantial international commitment

Global Marketing
Extensive international commitment Focus on segments, rather than countries or regions

Involves direct Focus on or indirect individual export countries or regions Ethnocentric Polycentric or Regiocentric

Geocentric

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International Philosophy
Human Resources Marketing & Sales

Management internationalization philosophy affects all functional areas of the corporation.

Based on EPRG framework

Corporation & Business Lines

Manufacturing & Distribution

Finance

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EPRG FRAMEWORK
ETHNOCENTRIC orientation

POLYCENTRIC orientation
REGIOCENTRIC orientation GEOCENTRIC orientation

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Ethnocentric Orientation
domestic market extension concept: Domestic strategies, techniques, and personnel are perceived as superior International customers, considered secondary International markets regarded as outlets for surplus domestic production International marketing plans developed in-house by international division

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Polycentric Orientation
multidomestic market concept: Focuses on importance and uniqueness of each international market May establish businesses in each target country Fully decentralized, minimal coordination with headquarters Marketing strategies = specific to each country Result:

No economies of scale, duplicated functions, higher final product costs

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Regiocentric Orientation
global marketing concept: World regions that share

economic, political, and/or cultural traits are perceived as distinct markets

Divisions are organized based on location Regional offices

coordinate marketing activities

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Geocentric Orientation
global marketing concept: world is perceived as a total market

with identifiable, homogenous segments

Targeted marketing strategies aimed at market segments,

rather than geographic locations

Achieve position as low-cost manufacturer & marketer of product line Provides standardized product or service

throughout the world

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Drivers of International Expansion

Competition Regional Economic & Political Integration Technology Improved Transportation & Telecommunication Economic Growth Transition to Market Economy Converging Consumer Needs

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Drivers of International expansion,

continued COMPETITION

McCann Erickson, the advertising agency,

follows longtime client, Coke,

to all countries where company is present

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Drivers of International Expansion,

continued REGIONAL, ECONOMIC and POLITICAL INTEGRATION

Regional agreements
such as NAFTA, MERCOSUR, and the European Union lower and eliminate barriers and promote trade within common markets.

Subsidiaries established in specific markets

to take advantage of free trade within the region.

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Drivers of International Expansion,

continued

TECHNOLOGY Consumers worldwide are exposed to similar products, services, and entertainment. The Web & the Internet have revolutionized the way companies conduct business.

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Drivers of International Expansion,

continued TRANSPORTATION and TELECOMMUNICATIONS Lower cost and higher quality communication due to satellite technology, teleconferencing, and e-mail Efficient transportation due to containerization and just-in-time technology

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Drivers of International Expansion,

continued ECONOMIC GROWTH Emerging middle class in big emerging markets
with increasing buying power Brazil and India

Opening of new markets previously closed,

such as China and Vietnam

Emerging economies
are becoming viable trade partners

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Drivers of International Expansion,

TRANSITION to a MARKET ECONOMY
Transition of Eastern Bloc to a market economy created important new markets Created opportunities to transform inefficient government-owned local companies into successful enterprises

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Drivers of International Expansion,

CONVERGING CONSUMER NEEDS Uniform consumer segments emerging worldwide: global teenagers, global elite

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Firm-Specific Drivers
Product Life Cycle Considerations: opportunity to prolong product lifecycle by entering growth markets.

Intro

Growth

Maturity

Decline

Sales

Sales Profits
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Firm-Specific Drivers,
High New Product Development Costs:
Firm must look beyond home-country market to recover investment costs

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Firm-Specific Drivers,
Standardization, Scale Economies, Cheap Labor Price competition during maturity drives firm to new international markets
Intro Growth Maturity Decline

Sales

Sales

Profits

Time
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Firm-Specific Drivers,
Experience Transfers
Experience in one country serves as basis for strategies in new international markets.

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Obstacles to Internationalization
Self-reference Criterion

Conscious and unconscious reference to own national culture while operating in the host country To counter

the impact of the self-reference criterion,

select appropriate personnel for

- international assignments

engage in sensitivity training* - Lessons in culture differences

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Obstacles to Internationalization
Government Barriers

Restrictions on foreign corporations - tariffs, - import quotas, and - other limitations,

such as restrictive import license awards

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Obstacles to Internationalization,
Barriers from International Competition

Blocked channels of distribution Exclusive retailer agreements Price reductions

- at the time of market entry

Advertising blitzes

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Chapter Summary
International involvement:

Domestic marketing, export marketing, international marketing and global marketing

Ethnocentric, polycentric, regiocentric, and geocentric Competition, regional integration, removal of trade barriers, improvements in transportation, telecommunications and technology, converging consumer needs

Internationalization philosophies:

Drivers of international expansion:

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Chapter Summary
Firm-specific drivers:

Prolonging product lifecycle, recovering new product development costs, price competition, standardization, economies of scale and cheap labor, experience transfers
Self-reference criterion, government barriers, competitive barriers

Obstacles to entry:

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