International Marketing

Plínio R. R. MONTEIRO, Ph.D |

plinio.monteiro-ext@skema.edu

ANALYZING
INTERNATIONAL
MARKETS

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 International Marketing
Plínio R. R. MONTEIRO, Ph.D |
plinio.monteiro-ext@skema.edu

PART I
Variables in global
opportunity analysis

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 CLASSIC APPROACH

• Considers variables that point to the

potential sales of a new market:
– Gross domestic product
– Consumer wealth levels (ex. GDP per
capita)
– Population size
– Propensity to consume

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 DISTANCE APPROACH
Considers variables that emphasize the costs
and risks of doing business in a new market,
through four dimensions of distance:

CAGE Model
Cultural Administrative Geographic Economic
•Different languages, and Political •Lack of common •Different consumer
ethnicities, religions, •Absence of shared border, waterway incomes
social norms monetary or access, adequate •Different costs and
•Lack of connective political association transportation or quality of natural,
ethnic or social •Political hostilities communication links financial, and
networks •Weak legal and •Physical remoteness human resources
financial institutions •Different climates •Different information
or knowledge

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https://globalization.stern.nyu.edu/cage
Ghemawat, P. (2001). Distance Still Matters. Harvard Business Review, 79(September), 137–147.
• Trade: Exports vs Imports / • Cultural: Common Official
Specific merchandise Language
• Capital: FDI Stocks, Flows, and • Administrative: Colonial linkage
Portfolio Stocks / Regional bloc
• Information: Telephone Calls, • Geographic: Physical distance
Scientific collaboration, Printed / Common border
Publications • Economic: GDP per capita
• People: tourism, Tertiary ratio
Students (MsC, PhD), Migration, • Effects on measure: %change =
emigration (Impact -1)x100
CAGE
Indicators: Distance
Impacts

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 How to use the NYU Stern Globalization
Explorer: CAGE Comparator™ tool - YouTube

https://www.youtube.com/watch?v=JquJPipRQhg&t=4s
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 Question 1
• Which country has the shortest CAGE
Distance to Brazil for the “number of tourist
arrivals”?
a. Japan
b. France
c. Paraguay
d. United States (USA)
e. Colombia

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 Question 2
• Which factor in the CAGE model has the
greatest positive impact on the exports of
“Essential oils and perfumes (33)”?
a. Common Official Language
b. Colonial linkage
c. Physical distance
d. Common border
e. GDP per capita ratio

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 International Marketing
Plínio R. R. MONTEIRO, Ph.D |
plinio.monteiro-ext@skema.edu

Cultural
Environment

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 Culture
• ‘the collective
programming of the mind
which distinguishes the
members of one human
group from another’
(Hofstede, 1980).
“It is the learned ways in which
a society understands,
decides and communicates”
(Hollensen, 2014 , p 245).

Hollensen, S. (2014). Global Marketing (6th

ed.). Edinburgh Gate: Pearson.

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 Elements of culture
Language

Manners and customs

Technology and material culture

Social institutions

Education

Values and attitudes

Aesthetics

Religion

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 Cross-Cultural models
Hofstede
Globe Project
Model
Private “Open source”

More countries in
More restricted study
dataset

7 dimensions related 9 dimensions relating

to values values and practices

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 Globe Project Dimensions
Performance Orientation:
• The degree to which a collective
encourages and rewards (and
should encourage and reward)
group members for performance
improvement and excellence.
Humane Orientation*:
• The degree to which a collective
encourages and rewards (and
should encourage and reward)
individuals for being fair,
altruistic, generous, caring, and
kind to others.
Gender Egalitarianism*:
• The degree to which a collective
minimizes (and should minimize)
gender inequality.
Assertiveness:
• the degree to which individuals
are (and should be) assertive,
confrontational, and aggressive
in their relationship with others.
Institutional Collectivism*:
• The degree to which
organizational and societal
institutional practices encourage
and reward collective
distribution of resources and
collective action.
Power Distance*:
• The extent to which the
community accepts and
endorses authority, power
differences, and status privileges.
* Similar to Hofstede Model
Future Orientation*:
• The extent to which individuals
engage (and should engage) in
future-oriented behaviors such as
planning, investing in the future,
and delaying gratification.
In-Group Collectivism:
• The degree to which individuals
express (and should express)
pride, loyalty, and cohesiveness
in their organizations or families.
Uncertainty Avoidance*:
• The extent to which a society,
organization, or group relies on
social norms, rules, and
procedures to alleviate
unpredictability of future events.
 International Marketing
Plínio R. R. MONTEIRO, Ph.D |
plinio.monteiro-ext@skema.edu

Cultural Intelligence

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 https://youtu.be/2xJ_hbD4TQA
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 Cultural intelligence
• The capability to
understand, adapt
and react to cultural
differences during
business or daily life
cross-cultural
interactions.

Barakat, L., Ramsey, J., Cretoiu, S. L., Lorenz, M., & Rutti, R. (2014).
Cultural intelligence as an Essential Competence for Global Executives
and Organizations. DOM, 68–76.
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 International Marketing
Plínio R. R. MONTEIRO, Ph.D |
plinio.monteiro-ext@skema.edu

Country of
Origin Effect

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 Country of Origin Effect

Consumers positive or
negative attitudes towards
a market offer given its
COE

country of origin. Usually

related to an entire
product category rather
than a single brand
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 General concept

Country A image and tradition

Product category image

Country B category perception

Brands’ Evaluation
Performance Status Risk
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Chocolat Perfum Fashion Furniture

Swiss France Italy Sweden

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 Country Of Origin (COO)
strategies
1 ‘Made in …’ 5 Use of the COO
language

2 Quality and origin 6 Use of famous or

labels (local name stereotypical people from
brands) the COO

3 COO embedded in 7 Use of COO flags and

the company name symbols

4 Typical COO words 8 Use of typical

embedded in the landscapes or famous
company name buildings from the COO22
Aichner, T. (2014). Country-of-origin marketing: A list of typical strategies with examples. Journal of Brand Management, 21(1), 81–93.

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 Conjoint Analysis:
applied to Country Origin Effects
• Conjoin Analysis (CA) is a useful and
traditional tool for modifying existing
products and services or developing
new [concepts] for selected market
segments (GREEN and WIND, 1970)

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 Assuming that you are in a bar that serves global beer options with your
colleagues or friends and that and that you have all the following options
of beers, rate from 0 to 10 to evaluate your intention to buy each of the
following options according to the scale below:
Would
Probably Would I Will definitely
Would buy or not
bit.ly/ca-prrm
definitely not
wouldn't buy probably buy buy
buy
0 1 2 3 4 5 6 7 8 9 10
Option Country Of Origin (COO): Beer type Price per cup (300 ml):
1 Brazil Pilsen (without alcohol) R$ 8
2 Germany Pilsen (without alcohol) R$ 12
3 Germany Pilsen R$ 16
4 China Pilsen R$ 16
5 Germany Pale Ale R$ 8
6 Brazil Pale Ale R$ 16
7 China Pilsen (without alcohol) R$ 12
8 Brazil Pilsen R$ 12
9 China Pale Ale R$ 8
10 Brazil Pilsen (without alcohol) R$ 12
11 China Pale Ale R$ 16
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12 Germany Pale Ale R$ 25
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 International Marketing
Plínio R. R. MONTEIRO, Ph.D |
plinio.monteiro-ext@skema.edu

Political-
Administrative
Environment
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 Aspects of the political and
economic environment

Home country Host country

•Create incentives •Can present risk (political,
•Support activities economical and transfer)
•Analyze potential trade
barriers (tariff and
nontariff)
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 Trade barriers

• Laws, rules or tariffs that favor local

firms and discriminate against foreign
ones. The aims of trade barriers are:
1. To protect domestic 2. To generate
producers: revenue.
• Seeking to protect national • Popular reason in Least
industries (typically under Developed Countries, under
patriotism premises) in short lack of accurate recordings
run, but could result in in taxes
reducing efficiency in the
long run

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 Categories of trade barriers
• Specific (applied to • Quotas (restriction on trade
specific categories) volume/value)
• Ad valorem (percentage • Embargoes (complete ban
of value) on trade)
• Administrative delays
• Discriminatory (against (custom bureaucracy)
some countries)
• Local-content requirements
(minimal home country
supplies)

Tariff Non-tariff
barriers barriers:
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 Preferential Trade Agreements
• PTAs are
agreements of Economic Union
special •Harmonization and Unification of economic and Social Policies and
institutions (may include central bank and government) achieving
treatment to common standards and rules/laws for trade. Eg: European Union.

partners (and Common Market

may • Allows for the free movement of factors of production, such as
labor, capital, and information. Eg: SICA and CARICOM are in
discriminate the direction of becoming a true common market.

against others)
Customs Union
seeking • Evolution of FTAs: eliminates internal barriers AND establishes
increase trade common external barriers. Examples: Mercosur, CARICOM,
Central American Integration System (SICA)

Free Trade Area

•Two or more countries agree to abolish tariffs and other
barriers to trade amongst themselves. Example: NAFTA

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 Examples of current PTAs
North America:
• NAFTA

Latin America:
• Andean Community, Mercosur, CARICOM

Asia-Pacific:
• The Association of Southeast Asian Nations (ASEAN)

Europe:
• European Union

Middle East:
• Wide variation in Economic Freedom rankings

AFRICA:
• ECOWAS, SADC, and East African Community
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 True or false

• In general home country politics create

barriers for global operations of national
companies.
• Host countries creates barriers
basically by increasing taxes for
imported products.
• The widespread of high-level PTAs
worldwide is an evidence of greater
economical globalization nowadays
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 International Marketing
Plínio R. R. MONTEIRO, Ph.D |
plinio.monteiro-ext@skema.edu

Geo-demographic
Environment

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 The Demographic
Environment:
• Refers to the size, distribution, and
growth rate of groups of people with
different characteristics.
• Along with economical factors,
demographical variables are the most
important ones to generate demand:
– Demand = Population x Average
Consumption

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Major prevailing
demographic challenges
The changing age structure of
the population;

Global Ageing;

Migration

Population characteristics.

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 https://youtu.be/meQBjOd2XqA
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 REFERENCES
• Ghemawat, P. (2001). Distance Still Matters.
Harvard Business Review, 79(September), 137–147.
• Keegan, W. J., & Green, M. C. (2017). Global
Marketing (9th ed.). Edinburgh Gate: Pearson.
(Chapters 4 and 5)
• Kotabe, M., & Helsen, K. (2007). Global Marketing
Management (4th ed.). New York: John Wiley &
Sons. (eBook available on scholarvox). (Chapters 4
and 5)
• Hollensen, S. (2014). Global Marketing (6th ed.).
Edinburgh Gate: Pearson (Chapter 6-7).

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 International Marketing
Plínio R. R. MONTEIRO, Ph.D |
plinio.monteiro-ext@skema.edu

PART II
INTERNATIONAL MARKETS
SELECTION
Link to course materials:
bit.ly/im-sk
 International market definition:
Countries, regions or consumers?

Country, group of Group of

countries or regions homogeneous
customers
• Easy to gather and
compare markets • Difficult to target in
• Ignores in-country cross country strategies
heterogeneity • Takes heterogeneity
into account

Try to mix and merge

(multiple steps approach) )
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 International market segmentation
screening model (Hollensen, 2014)

Hollensen, S. (2014).
Global Marketing
(6th ed.). Edinburgh
Gate: Pearson (p.
273).

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 Step 1: Variables selection
basis for international market segmentation

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 Step 2: Country Segmentation
• Define product/service or individual
variables related to adoption and
acceptance in a given market
• Country Segmentation approaches

Compare and relate a Group countries,

Post Hoc:
A priori:

priori selected groups regions or costumers

(e.g. low GDP versus according to
high GDP countries) to selected market
variables representing
response/profile
demand or potential
(consumption or
variables (e.g. cluster
potential) analysis or CHAID)

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Step 3: The screening process

Stage 3.1
Stage 3.2
Preliminary
Fine-grained
Screening
Screening
(based on external (firm’s competitive
screening criteria) power)

The Business Environment Risk Index (BERI)

is a useful tool for coarse-grained, macro-oriented
screening of international markets
Hollensen (2014)*

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 Step 4: Develop segments in each
qualified market
• In each selected country (or region)
use micro data (secondary or primary)
to develop segments, using traditional
variables as such:
– Demographics
– Geography
– Buyer behavior
– Lifestyles/Psychographics
– Consumer attitudes , beliefs and intentions
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 International Marketing
Plínio R. R. MONTEIRO, Ph.D |
plinio.monteiro-ext@skema.edu

Global consumer
segments

Link to course materials:

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 Global segments
Some consumer groups carry structural
similarities throughout the world in terms of:

• Objective conditions
• Ideologies and aspirations
• Consumption practices

They compose a global segment as they

transcend national boundaries
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 Global Customer’s Segments
Poor customer in emerging economies
Bottom of Majority of world population
pyramid: Aggregate consumption represents many
opportunities

Large proportion of world population (10-50%)

New Middle Fast growth (BEMs)
classes Consumption related to lifestyle and
individualism

Concentrated in developed economies

Mass
Consumption of luxury and status products
affluent Connected and influent

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 True or False

• The process of global market

segmentation begins with the choice of
one or more variables to use as a basis
for grouping customers.
• The assumption of homogeneity should
be the cornerstone of a company's
market segmentation effort.

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 International Marketing
Plínio R. R. MONTEIRO, Ph.D |
plinio.monteiro-ext@skema.edu

POSITIONING:
Market expansion
strategies

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 Market entry questions

• The main questions by now is, should

we:
1. Enter the market Incrementally (the
waterfall approach) or simultaneously
(the shower approach)?
2. Concentrate or diversify our resources
across international markets?
3. How much off our strategy should be
standardized or customized?

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 Main global positioning
approaches
More Less
Criteria
resources resources
Simultaneous Incremental
TIME
(shower) (waterfall)

SCOPE
Diversification Concentration
(Market/Country)

Adaptation STRATEGY Standardization

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 Complementary videos
International Market segmentation: country level segmentation and screening
(24:23): This video discusses the importance of making the country level segmentation as
a part of the international market selection process, and also shows how to make the
initial and deep screening of country conditions before choosing your target markets
https://web.microsoftstream.com/video/521ae089-6ff3-4fff-abf1-29055cc749cf
Micro level segmentation and Global Customers segments (16:52): This video
explains how to develop a microlevel segmentation and discuss how the usage of global
customer segments can be useful when targeting specific profile of clients across countries
https://web.microsoftstream.com/video/04ae1c6f-8e1f-4828-a7e5-
039167d009bc
International positioning: Market expansion strategies (16:50): In this presentation
I discuss the role of international positioning, explaining how this stage of international
markets segmentation is driven by decisions related to how a business will expand their
operations globally https://web.microsoftstream.com/video/c58a6eb5-f9f0-4677-8671-
f72e495bb458

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 REFERENCES
• Keegan, W. J., & Green, M. C. (2017). Global
Marketing (9th ed.). Edinburgh Gate:
Pearson. (Chapters 4 and 5)
• Kotabe, M., & Helsen, K. (2007). Global
Marketing Management (4th ed.). New
York: John Wiley & Sons. (eBook available on
scholarvox). (Chapters 4 and 5)
• Hollensen, S. (2014). Global Marketing (6th
ed.). Edinburgh Gate: Pearson (Chapter 6-
7).

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 How are you coming out of
this class? What’s the main
new content that you
learned or discovered in the
lecture? Please comment.

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International Marketing
Plínio R. R. MONTEIRO, Ph.D |
plinio.monteiro-ext@skema.edu

END OF LECTURE

Link to course materials:

bit.ly/im-sk