InternationalMarketing

The Scope and Challenge

of International Marketing
Chapter 1

PP Presentation by
Dr. Shaikh Rafiqul Islam
Ph.D(Malaysia), MBA(Australia), M.Com(DU)
Professor
Department of Marketing
Jagannath University

What Should You Learn?

• ​The changing face of business
• ​The scope of the international marketing task
• ​The importance of the self-reference criterion
(SRC) in international marketing
• ​The progression of becoming a global marketer
• ​The increasing importance of global awareness

1-2
 Global Perspective:
Global Commerce Causes
Peace ​• ​Global commerce during peace time
– ​Commercial aircraft and space vehicle industries
– ​Mobile phone industry
– ​Individuals and small companies
• ​International markets are ultimately
unpredictable
– ​Flexibility means survival
 1-3

Events and Trends

Affecting Global Business
• ​The rapid growth of the World Trade Organization
and regional free trade areas
• ​The trend toward the acceptance of the free
market system among developing countries in
 Latin America, Asia, and Eastern Europe
• ​The burgeoning impact of the Internet, mobile
phones, and other global media on the dissolution
of national borders
• ​The mandate to properly manage the resources
and global environment for the generations to
come

1-4

The Internationalization
of U.S. Business
• ​Increasing globalization of markets
• ​Increasing number of U.S. companies are
foreign controlled
– ​$16.3 trillion in foreign investment in the U.S. – $2.6
trillion more than American overseas investment
• ​Increasing number of foreign companies building
and buying manufacturing plants in the U.S.
• ​Increasing difficulty for domestic markets to
sustain customary rates of growth
 1-5

Foreign Acquisitions
of U.S. Companies
Exhibit 1.1
 1-6

Selected U.S. Companies

and Their International Sales
 Exhibit 1.2

1-7

Why internationalization?

• ​Saturation of U.S. markets

• ​Higher ROI in foreign markets
• ​Establish early position in world markets
• ​US firms exporting, importing and/or manufacturing abroad 
• ​Foreign-based firms operating in U.S. markets
• ​Growth of regional trade areas
• ​Rapid growth of world markets ​[cont.]

1-8

International Marketing
• ​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

1-9
 Why internationalization? ​[cont.]

• ​Increasing number of competitors for global markets  

• ​U.S. multinationals increasingly face competition
for lucrative markets from companies from
developing countries
• ​Political and economic changes in Latin America,
Asia, Eastern Europe and the former members of
the Soviet Union, India etc.
• ​Growth of new markets
 1-10

International Marketing Defined

• ​‘The performance of business activities designed to plan, price, promote, &

direct the flow of a company’s goods & services to consumers/users in
more than one nation for a profit’

• ​The only difference in the definitions of domestic & international marketing is.... in
more than one ​nation

• ​This minor difference accounts for complexity and diversity in international

 marketing

• ​Marketing concepts, processes, & principles are universally applicable & the
marketer’s task is the same whether doing business in Texas or Tanzania
• ​Business’s goal is to make a profit by promoting, pricing and distributing products
for which there is a market.
1-11

International Marketing Defined

​Natural question is ‘what’s the difference between ​international

& domestic marketing?’

• ​The difference lies with the ​environment​ ​within which marketing

plans/strategies must be implemented
• ​The uniqueness of international marketing comes from the range of
unfamiliar problems and the variety of strategies necessary to cope with
different level of uncertainty

• ​Marketing consists of controllable & uncontrollable elements

• ​Molding the controllables within the framework of uncontrollables of the

marketplace to achieve marketing objectives is more interesting
1-12

The International Marketing Task

​International marketing task is more complicated

 depending on the number of countries in which a
marketer operates as because of uncontrollables

​Every country adds a set of unique problems

​A solution to a problem in one market is not

applicable to a problem in other markets

1-13

The International Marketing Task

Exhibit 1.3

1-14

The International Marketing

Task ​Marketing decision factors
o ​Product
o ​Price
o ​Place
o ​Promotion
Aspects of the domestic environment
o ​Political/legal forces
o ​Competitive structure
o ​Economic climate
Aspects of the foreign environment
o ​Political/legal forces
o ​Cultural forces
o ​Geography and infrastructure
o ​Structure of distribution
o ​Level of technology
 o ​Competitive forces
o ​Economic forces 1-15
​

The International Marketing

Task ​ ​Marketing decision factors

• ​Construct a marketing program with 4 Ps for optimal adjustment to

uncontrollables assuming corporate resources to capitalize on anticipated
demand.

• ​The controllables can be altered to adjust to changing market conditions,

consumer tastes, or corporate objectives.
• ​The uncontrollable factors must be evaluated & marketing program must ​be
adapted to them .

• ​The success depends on the amount of successful adaptation of marketing

mix to these environmental factors.
1-16

The International Marketing

Task ​ ​Aspects of the domestic
environment
(uncontrollable but has impact​)
These include home-country elements that can have a direct effect on the
success of a foreign venture: political and legal forces, economic
climate, and competition
• ​Any political decision involving domestic foreign policy has a direct
effect on ………..(+ve or-ve)
For example, the ​Bangladesh maintains a ban on trade with Israel.
Bangladesh said that it will not recognize Israel until there is an
independent Palestine.

• ​Domestic economic climate has far-reaching effects on...

Foreign Exchange Regulation Act of 1947, which governs Bangladeshi
investment abroad, was amended in 2015, it only allows limited investment on
case-to-case basis.

• ​Competition within home country affects a company's domestic as

well as international plans.
For example, E​astman Kodak dominated the US film market ​and ​competitive
st​ ructure changed when Fuji Photo Film became ​formidable by cutting prices ​1-17

TheInternationalMarketingTask ​
Aspects of the foreign environment

• ​A marketer in home country feels comfortable because….

• ​The process of evaluating the uncontrollables involves substantial
doses of ​cultural, political, & economic shock.
• ​A multinational company might find polar extremes in political
stability, class structure, & economic climate.
• ​The dynamic upheavals in some countries create the problems of
dramatic change in cultural, political, & economic climates
For example: ​Coca-Cola had won approval for its plan to build a new
facility to increase production for its increasing Chinese market share.
But before construction began, the Chinese parliament objected that
Coca-Cola appeared to be too successful in China, so negotiations
continued delaying the project. Such are the uncertainties of the
uncontrollable political and legal factors of international business
 • ​More significant elements in uncontrollable international
environment are in outer circle which constitute the principal
elements of uncertainty with which a marketer must cope his
marketing program

1-18

The International Marketing

Task ​ ​Aspects of the foreign
environment
​Political/legal forces
 ​Political shifts in govt. may result in expropriation/confiscation/ domestication
/imposing restrictions
 ​It needs for a close study of the uncontrollable elements in every country
 ​Different strategies are needed due to differences in political climate, stages of
economic development, level of technology etc
 ​“Alien status" increases the difficulty of properly assessing & forecasting business
climate

​2 ​dimensions of alien status:

​foreigners control the business
​the culture of the host country is alien to management.

For example, Indian govt gave Coca-Cola the choice of either revealing its secret formula
or leaving the countryT​ he company chose to leave. When it was welcomed back
several years later, it faced harassment and constant interference in its operations
from political activists, often inspired by competing soft drink companies.

1-19

Aspect of foreign environment

​Others:​​Cultural forces
​ ​Geography and infrastructure
 ​Structure of distribution
 ​Level of technology
 ​Competitive forces
​Economic forces
 1-20

Environmental Adaptation Needed

❖ ​Marketer must interpret the influence of all uncontrollables (culture) on
marketing plan

❖ ​The task of adjustment is most challenging

❖ ​In domestic market marketer’s response is ​automatic ​based on inherited

(acquired) frame of reference

For example,a Frenchman ‘knows’ how to behave and operate in France ❖

​
Frame of reference can be a serious constraint ​when operating abroad ​❖

Adjust marketing efforts to cultures to which one is not attuned

For example, a westerner must learn that white is a symbol of….…..

Or Gesturing OK symbol

❖ ​Cultural conditioning is like an iceberg of which 9/10 is unknown ​1-21

Environmental Adaptation
• ​Ability to effectively interpret the influence and
impact of the culture in which you hope to do
business
– ​Cultural adjustments
 • ​Establish a frame of reference
• ​Avoid measuring and assessing markets against
the fixed values and assumptions of your own
culture

1-22

SRC and Ethnocentrism: ​Major Obstacles

• ​The key to success is adaptation meaning ​a conscious effort to anticipate the
influences of foreign and domestic uncontrollables on marketing mix and
 then to adjust marketing mix

• ​The primary obstacle to this is ​SRC ​and ​Ethnocentrism

• ​SRC means ​an unconscious reference to one’s own cultural values,​ ​experiences
& knowledge as basis for decisions

• ​Ethnocentrism is ​the notion that one’s own culture/company knows the best
how to do things

• ​Both affect our ability to observe & interpret which might lead to
misunderstanding & misinterpreting of …..
(Example: Body language, personal space)

• ​SRC can prevent us from being aware that there are cultural differences ​1-23

The Self-Reference Criterion

and Ethnocentrism
• ​The key to successful international marketing is
adaptation ​to the ​environmental differences
from one market to another
• ​Primary obstacles to success in international
marketing
– ​SRC
– ​Associated ethnocentrism

1-24
SRC and Ethnocentrism: ​Major
Obstacles

• ​SRC and Ethnocentrism can influence an evaluation of the

appropriateness ​of a domestically designed marketing mix for a
foreign market

• ​Both impede the ability to access a foreign market

• ​When a marketer takes time to look beyond his SRC, the results
are positive
 • ​The best way to control is to recognize their influences on our

behavior ​1-25

Steps suggested to isolate SRC influences and to

maintain a vigilance regarding ethnocentrism
1. ​Define the business problem or goal in home-country
cultural traits, habits, or norms.
2. ​Define the business problem or goal in foreign-country
traits, habits, or norms through consultation with
natives of the target country. Make no value judgments.
3. ​Isolate the SRC influence in the problem & examine it
carefully to see how it complicates the problem.
4. ​Redefine the problem without the SRC influence & solve
for the optimum business goal situation.
• ​Example ‘An American sales manager newly posted to Japan decided that his
Japanese sales representatives did not need to come into Japanese office
every day for an early morning meeting before beginning calls on clients in
Tokyo ​and then….’ ​Japanese staff, he determined that Japanese sales
representatives are motivated mostly by peer pressure.
1-26

SRC and Ethnocentrism

• ​SRC is an unconscious reference to
– ​One’s own cultural values, experiences, and
knowledge as a basis for decisions
• ​Dangers of the SRC
– ​Failing to recognize the need to take action ​–
Discounting the cultural differences that exist
among countries
– ​Reacting to a situation in an offensive to your hosts
• ​Ethnocentrism
– ​Notion that one’s own culture or company knows
best
 1-27

SRC and Ethnocentrism

• ​Ethnocentrism and the SRC can influence an
evaluation of the ​appropriateness ​of a
domestically designed marketing mix for a
foreign market
• ​The most effective way to control the influence
of ethnocentrism and the SRC is to ​recognize
their effects on our behavior
 1-28

Stages of International Marketing Involvement

Marketer must decide the degree of marketing

involvement and commitment

❖​No direct foreign marketing

❖​Infrequent foreign marketing
❖​Regular foreign marketing
❖​International marketing
❖​Global marketing

1-29

Stages of International Marketing

Involvement

No direct foreign marketing

❖ ​Does not actively cultivate customers in foreign market
 ❖ ​Products reach foreign markets via domestic wholesalers
or distributors
❖ ​Foreigners may come directly to the firm
❖ ​Many firms receive orders from international Web surfer

1-30

Stages of International Marketing Involvement

Infrequent foreign marketing
❖ ​Temporary surpluses result in infrequent foreign marketing
❖ ​Increased domestic demand may withdraw foreign task ​❖
Little or no change in company organization or product line
❖ ​Few companies today fit this model

1-31
Stages of International Marketing Involvement

Regular foreign marketing

❖ ​Permanent productive capacity devoted to production of goods

❖ ​Employ foreign or domestic overseas middlemen or own sales
force or sales subsidiaries in important foreign countries
❖ ​Primary focus is to serve domestic market needs ​❖ ​As
overseas demand grows, production is allocated for foreign markets ​❖
Products may be adapted to meet the needs of individual foreign markets
 1-32

Stages of International Marketing Involvement

International marketing
❖ ​Fully committed to & involved in international marketing
❖ ​Seek markets all over the world & sell products that are a
result of planned production for markets in various countries
❖ ​Offer region/country-specific marketing & production ​❖
Becomes an international or multinational marketing firm
 1-33

Stages of International Marketing

Involvement ​• ​Global marketing
❖ ​Treat the world as a single market
❖ ​Based on global homogeneity
❖ ​Market segments are defined by income levels, usage
patterns, or ​other factors that often span countries and
regions
❖ ​Major profit comes from abroad
❖ ​Entire operation begins to take on a global perspective ​1-34

Strategic Orientation

EPRG framework

E​thnocentric
 P​olycentric
R​egiocentric
G​eocentric

1-35

StrategicOrientation
Et​ hnocentric
Domestic market extension concept
• ​Orientation is to serve markets with the same
programs

• ​Export excess production - no real attempt to adjust to

foreign conditions
• ​International operations are secondary & an extension

of …. ​• ​Seek markets where demand is similar to the

home market
 • ​Firms with this marketing approach are classified as
ethnocentric in the EPRG schema
• ​International Company
1-36

Strategic Orientation
P​olycentric
Multidomestic market concept

• ​Recognition of country differences

• ​Market on a country-by-country basis with separate

marketing strategies for each country
• ​Control is typically decentralized

• ​Firms with this orientation would be classified in the ​EPRG

schema as polycentric

❖ ​Multinational Company
1-37

StrategicOrientation
Re​ giocentric
❖ ​Views an entire set of country markets as a unit

❖ ​Strives for efficiency of scale by developing a

standardized marketing mix applicable across national
boundaries

❖ ​Market segments are based on consumer

characteristics, usage ​patterns, legal constraints, and so
on

❖ ​Wherever cultural uniqueness dictates the need for

adaptation of the product, its image, and so on, it is
accommodated

❖ ​Firms with this orientation fit regiocentric or

geocentric in the EPRG schema

❖ ​Global Company​ ​1-38

 G​eocentric
• ​Regiocentric and Geocentric are synonymous
with a Global
• ​Marketing Orientation where a uniform,
standardized
• ​marketing strategy is used for several countries,
countries in
• ​a region, or the entire world
 1-39

Developing Global Awareness

• ​Opportunities awaits those who are prepared to confront myriad
obstacles with optimism and globally aware
• ​To be globally aware is to have
​Tolerance of cultural differences

understanding differences and accepting and working with

others beware of trap of falling in love with another culture
​Objectivity
 know oneself, one’s own cultural biases
​ nowledge of:
K
► ​cultures
► ​history
► ​world market potential
► ​global trends: economic, social and political
1-40