The Scope and Challenge of International Marketing: Mcgraw-Hill/Irwin

The Scope and Challenge of
International Marketing
Chapter 1
McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
LO1 The benefits of international markets
LO2 The changing face of U.S. business
LO3 The scope of the international marketing task
LO4 The importance of the self-reference criterion
(SRC) in international marketing
LO5 The increasing importance of global awareness
LO6 The progression of becoming a global marketer
International Marketing Strategy levels. international theories and marketing involvement,

Prepared by Dr. Nermin A. Daniel. Eslsca MBA International Marketing 1-2
Global Commerce Causes Peace
▪ Global commerce thrives during peacetime
▪ Economic boom in North America in the late 1990s
largely due to the end of the cold war

The Internationalization of U.S. Businesses
Exhibit 1.1 Foreign Acquisitions of U.S. Companies, Sources: Compiled from annual
reports of listed forms, 2012. 1-4
The Internationalization of U.S. Businesses
The ownership of many U.S. businesses is located with

companies headquartered outside of the U.S. It is interesting to
see that a company like Burger King is British and Seven Eleven
is Japanese, brands in our daily life that we consider “American.”

Prepared by Dr. Nermin A. Daniel. Eslsca MBA International Marketing
Exhibit 1.1 Foreign Acquisitions of U.S. Companies, Sources: Compiled from annual
reports of listed forms, 2012. 1-5
Gigante, one of Mexico’s largest supermarket chains, now has several stores in
Southern California, including this one in Anaheim. On store shelves are a
variety of Bimbo bakery products. Grupo Bimbo, a growing Mexican
multinational, has recently purchased American brand-named firms such as
Oroweat, Webers, Sara Lee, and Mrs. Baird’s Bread.

The International Marketing Task
Four One
Three Two

What makes international marketing so much more
complicated than domestic marketing are the various
uncontrollable factors that companies have to encounter
in international markets in addition to all the
uncontrollable factors they would normally face in
domestic markets. The uncontrollables in a foreign
country could range from political or legal regulations
that are unique to a country, competition, to consumer
tastes and socio-cultural differences that are new to the
company. Exhibit 1.3: The International Marketing Task
illustrates the environment in which a firm operates in
global markets.

Case 1–1, Starbucks-Going Global Fast, is a good way to
think about the marketing mix and the effects of
uncontrollables and controllables both in the domestic and
foreign environments. How would you have done things
differently to overcome some of the problems illustrated in the
case? Starbucks is looking to boost its overall rate of growth
by applying its business formula to other nations that lack a
Starbucks-type chain.
In doing so, it is helping to change aspects of the material
culture of those countries it enters, to feel more like the U.S.
At the same time, Starbucks has found that to succeed
internationally, it must customize aspects of its operations and
marketing to local conditions, by introducing new versions of
its basic drinks that appeal to local tastes for example.
The Marketing Environment
▪The Marketing Environment includes the

actors and forces outside marketing that affect
marketing management’s ability to build and maintain
successful relationships with customers.
Ch 3 - 3
Strategy levels. international theories and marketing involvement,
Copyright © 2011 Pearson Education
The Company’s Microenvironment
▪A microenvironment consists of the actors

close to the company that affect its ability to serve its
customers, the company, suppliers, marketing
intermediaries, customer markets, competitors, and
publics.
▪A macroenvironment consists of larger

environmental forces
Ch 3 - 4
The Company’s Microenvironment
Ch 3International
-5 Copyright
Marketing © 2011
Strategy Pearson
levels. Education theories and marketing involvement,
international
The Company’s Macroenvironment
Ch 3 - 11
Demographic Environment
Demography
▪Demography is the study of human populations in terms

of size, density, location, age, gender, occupation, and other
statistics.
• The demographic environment is important because it
involves people, and people make up markets.
• Demographic trends include age, family structure, geographic
population shifts, educational characteristics, and population

diversity.
Ch 3 - 12
Economic Environment
Economic Environment
▪The Economic Environment consists of

factors that affect consumer purchasing power and
spending patterns.
Ch 3 - 21
Natural Environment
Natural Environment
▪The Natural Environment involves the

natural resources that are needed as inputs by
marketers, or that are affected by marketing activities.
Ch 3 - 24
Technological Environment
The Technological Environment is the most dramatic

force in changing the marketplace.
• It creates new products and opportunities.
Ch 3 - 25
Political Environment
▪The Political Environment consists of laws,

government agencies, and pressure groups that
influence or limit various organizations and individuals
in a given society.
Ch 3International
- 26 Copyright
Marketing © 2011
Strategy Pearson
levels. Education theories and marketing involvement,
international
Legislation Regulating Business
• Increased legislation
Ch 3 - 27
Cultural Environment
Cultural Environment
▪The CULTURAL ENVIRONMENT consists of

institutions and other forces that affect a society’s
basic
Ch 3 - 29
Exhibit 1.2 Selected U.S. Companies and
Their International Sales
Source: Compied from annual reports of listed firms, 2012

Exhibit 1.2 Selected U.S. Companies and
Their International Sales
The changing world economy has created unique opportunities

for marketers. A product that has reached the end of its lifecycle
in a mature western market may have tremendous potential in
emerging markets such as Brazil, Russia or China. The reduced
barriers and access to cross-border trade makes it possible for
firms to source from various countries, reduce costs and sell
worldwide. Deregulated markets in the former USSR and Eastern
Europe, increasing competition, and open foreign investment
policies in Asia, South America, and Africa have created new
opportunities. It has allowed businesses to expand
internationally.
Source: Compied from annual reports of listed firms, 2012

Photo Caption:
• A Citibank branch in the heart of Brazil on a rainy day. The
address on the Avenida Paulista is 1776—how American! One
of the world’s great multinational corporations barely survived
the financial debacle of October 2008. Perhaps its red, white,
and blue umbrella logo protected it from “adverse weather”
on Wall Street? Indeed, during the past few years, its
international operations have performed much better than its
domestic ones.
• In particular, emerging markets such as China, India, and Brazil

proved relatively resilient during the global financial crisis that
began in 2008.

Self-Reference Criterion & Ethnocentrism
▪ Self-Reference Criterion (SRC)
▪ Ethnocentrism

▪ Self-Reference Criterion (SRC) is an unconscious

reference to one’s own cultural values, experiences,
and knowledge as a basis for decisions.
▪ Ethnocentrism is the notion that people in one’s own
company, culture, or country know best how to do
things.
▪ Both the SRC and ethnocentrism impede the ability
to assess a foreign market in its true light.


things.



things.


Developing Global Awareness
To be globally aware is to have:
▪ tolerance of cultural differences and
▪ knowledge of cultures, history, world market
potential, and global economic, social, and political
trends

Developing Global Awareness
▪ Tolerance for cultural differences is crucial in international
marketing. Tolerance is understanding cultural differences and
accepting and working with others whose behaviors may be
different from ours. Global awareness also involves knowledge of
world market potentials and global
▪ economic, social, and political trends. Over the next few years,
there will be major changes in the socio-economic and political
scenes round the world, particularly in the developed world. Global
awareness is not simply recognizing that your world views are
different from others, but also accepting the diverse perspectives of
others. For example, that slurping and burping is a sign of respect
for the host’s cooking and not bad manners, it means that the
guests are thoroughly enjoying the food. Behaviors are not
standard across countries, what’s acceptable in one country may be
completely taboo in another.

Factors Favoring Faster
Internationalization
▪ Companies with either high technology and/or
marketing-based resources are better equipped to
internationalize than more traditional manufacturing
companies (Tseng et. al., 2007)
▪ Smaller home markets and larger production
capacities favor internationalization (Fan & Phan,
2007) and
▪ Firms with key managers well networked
internationally are able to accelerate the
internationalization process (Freeman and Cavusgil,
2007)
The Orientation of International
Marketing
▪ Environmental/cultural approach
▪ Relate the foreign environment to the marketing
process
▪ Illustrate how culture influences the marketing task
▪ The cultural environment within which the marketer
must implement marketing plans can change
dramatically from country to country

The Orientation of International
Marketing
▪ The text addresses issues relevant to any company marketing
in or into any other country or groups of countries, however
slight the involvement or the method of involvement.
▪ Hence this discussion of international marketing ranges from
the marketing and business practices of small exporters, such
as a Colorado-based company that generates more than 50
percent of its $40,000 annual sales of fish-egg sorters in
Canada, Germany, and Australia, to the practices of global
companies such as Microsoft, Mary Kay, and Johnson &
Johnson, all of which generate more than 50 percent of their
annual profits from the sales of multiple products to multiple
country-market segments all over the world.

Stages of International Marketing
Involvement
▪ No Direct Foreign Marketing
▪ Infrequent Foreign Marketing
▪ Regular Foreign Marketing
▪ International Marketing
▪ Global Marketing

Stages of International Marketing Involvement
▪ No Direct Foreign Marketing
In this stage, a company does not send its products

overseas directly, but its products may become available
in other countries through intermediaries or middlemen
such as trading companies. Occasional internet sales
because of a request from an overseas customer may also
fall into this category.

36
1-36
▪ Infrequent Foreign Marketing

Temporary surpluses in inventory may cause companies to sell
their excess product in overseas markets. Note that in the first
two stages of International Marketing Involvement, the
strategies are reactive rather than proactive.

37
1-37
Regular Foreign Marketing

▪ In this stage a firm has committed permanent resources
towards international marketing and engages in it regularly on
a proactive basis. The firm may use intermediaries to engage
in international marketing.

38
1-38
▪ In this stage has planned production and marketing
to many countries around the world with specific
targets for each overseas country market. It
involves not only marketing but also production of
goods in overseas markets.

39
1-39
Global Marketing
▪ In the global marketing stage, the firm starts viewing
the world, including their home market as one
market. The major change is the orientation
towards world markets and the activities directed at
supporting this view.

40
1-40
▪ When exploring the different stages of international marketing

involvement, it is important that we understand that a global
marketing orientation does not necessarily mean
standardization across all markets.
▪ Instead it may mean operating as if all country markets in a

company’s scope of operations (including the domestic
market) are approached as a single global market that may
have multiple market segments extending across national
borders and that the company may be seeking commonalties
across country markets in order to standardize the marketing
mix where it is culturally feasible and cost effective.

41
1-41
Case 1–1,
Starbucks-Going Global
Fast
▪ The need to customize products and operations to local conditions that
Starbucks encountered is a consistent theme in international marketing.
Similarly, Starbucks' decision to take on foreign partners to help expand
internationally is one that many companies must deal with. It also
illustrates that it is inevitable for companies not to be influenced by Self
Reference Criterion (SRC) or Ethnocentric attitudes, it is important that
they consciously pay attention to overcome these attitudes while entering
foreign markets. A person from one culture is often not aware that a
reaction is influenced by one’s cultural background and that those from
another culture may have a different perspective. The nature of the SRC is
that whenever confronted by some aspect of another culture one’s
reaction and evaluation is routinely clouded by one’s own cultural
experiences. For example, it is common for one to frown upon the foods
of another country when the same feelings may be expressed when
people from that country visit other world regions. It is how one is raised
and the foods one is accustomed to, such pepperoni topping on pizza in
the U.S., a topping which most of the rest of the world is not familiar
with. When this topping was requested by an American tourist in
Germany, she received a pizza topped with “pepperoncini” peppers. In
Korea, it is common to top ice cream with canned corn, which most of the
western world may view with distaste at first reaction which is a natural
reaction based on one’s own SRC and ethnocentric values.

42
The need to customize products and operations to local
conditions that Starbucks encountered is a consistent theme in
international marketing. Similarly, Starbucks' decision to take on
foreign partners to help expand internationally is one that many
companies must deal with. It also illustrates that it is inevitable for
companies not to be influenced by Self Reference Criterion
(SRC) or Ethnocentric attitudes, it is important that they
consciously pay attention to overcome these attitudes while
entering foreign markets. A person from one culture is often not
aware that a reaction is influenced by one’s cultural background
and that those from another culture may have a different
perspective.
International Marketing Strategy levels. international theories and marketing involvement, 43

• The nature of the SRC is that whenever confronted
by some aspect of another culture one’s reaction and
evaluation is routinely clouded by one’s own cultural
experiences.
• For example, it is common for one to frown upon the

foods of another country when the same feelings may
be expressed when people from that country visit other
world regions. It is how one is raised and the foods one
is accustomed to, such pepperoni topping on pizza in
the U.S., a topping which most of the rest of the world is
not familiar with. When this topping was requested by
an American tourist in Germany, she received a pizza
topped with “pepperoncini” peppers. In Korea, it is
common to top ice cream with canned corn, which
most of the western world may view with distaste at first
reaction which is a natural reaction based on one’s
own SRC and ethnocentric values.

44
THANK YOU


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The Scope and Challenge of

International Marketing Strategy levels. international theories and marketing involvement,

International Marketing Strategy levels. international theories and marketing involvement,

The ownership of many U.S. businesses is located with

International Marketing Strategy levels. international theories and marketing involvement,

International Marketing Strategy levels. international theories and marketing involvement,

International Marketing Strategy levels. international theories and marketing involvement,

International Marketing Strategy levels. international theories and marketing involvement,

▪The Marketing Environment includes the

▪A microenvironment consists of the actors

▪A macroenvironment consists of larger

▪Demography is the study of human populations in terms

• The demographic environment is important because it

involves people, and people make up markets.

• Demographic trends include age, family structure, geographic

population shifts, educational characteristics, and population

▪The Economic Environment consists of

▪The Natural Environment involves the

The Technological Environment is the most dramatic

▪The Political Environment consists of laws,

▪The CULTURAL ENVIRONMENT consists of

Source: Compied from annual reports of listed firms, 2012

International Marketing Strategy levels. international theories and marketing involvement,

The changing world economy has created unique opportunities

Source: Compied from annual reports of listed firms, 2012

International Marketing Strategy levels. international theories and marketing involvement,

• In particular, emerging markets such as China, India, and Brazil

International Marketing Strategy levels. international theories and marketing involvement,

▪ Self-Reference Criterion (SRC)

International Marketing Strategy levels. international theories and marketing involvement,

▪ Self-Reference Criterion (SRC) is an unconscious

International Marketing Strategy levels. international theories and marketing involvement,

▪ Self-Reference Criterion (SRC) is an unconscious

International Marketing Strategy levels. international theories and marketing involvement,

▪ Self-Reference Criterion (SRC) is an unconscious

▪ Ethnocentrism is the notion that people in one’s own

▪ Both the SRC and ethnocentrism impede the ability

International Marketing Strategy levels. international theories and marketing involvement,

International Marketing Strategy levels. international theories and marketing involvement,

International Marketing Strategy levels. international theories and marketing involvement,

International Marketing Strategy levels. international theories and marketing involvement,

International Marketing Strategy levels. international theories and marketing involvement,

International Marketing Strategy levels. international theories and marketing involvement,

▪ No Direct Foreign Marketing

In this stage, a company does not send its products

International Marketing Strategy levels. international theories and marketing involvement,

▪ Infrequent Foreign Marketing

International Marketing Strategy levels. international theories and marketing involvement,

Regular Foreign Marketing

International Marketing Strategy levels. international theories and marketing involvement,

International Marketing Strategy levels. international theories and marketing involvement,

International Marketing Strategy levels. international theories and marketing involvement,

▪ When exploring the different stages of international marketing

▪ Instead it may mean operating as if all country markets in a

International Marketing Strategy levels. international theories and marketing involvement,

International Marketing Strategy levels. international theories and marketing involvement,

International Marketing Strategy levels. international theories and marketing involvement, 43

• For example, it is common for one to frown upon the

International Marketing Strategy levels. international theories and marketing involvement,

International Marketing Strategy levels. international theories and marketing involvement,

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