Chapter 1

An Overview
Objectives
After completing this chapter, students can:
1. Understand the concept and the role of IM
2. Be able to analyze those uncontrollable elements in the foreign
environment
3. Identify IM orientations
Content
1. An overview of IM
2. The differences between domestic marketing & IM
3. The Orientation of IM
4. IM process

3
1.1 The concept of IM
 38% of European SMEs are now 'internationally active’
i.e. exporting products to at least one other country according to recent
research
International marketing focuses on the need to create, communicate
and deliver value internationally (Czinkota and Ronkainen, 2012).

International marketing is the 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. (Philip R. Cateora, 2015)
Concepts
“Foreign and domestic marketing are the same in that the purpose is to
create and manage profitable exchange relationships between an
organisation and its markets.

This is done by satisfying the needs and wants of a particular market more
efficiently than competitors.

Essentially the same marketing principles, concepts and techniques are used
internationally as are at home”

(Toyne & Walters, 1989)

1.2 Reasons for entering international
markets
Domestic market International market Other

- small, fragmented, - large market size - suppliers follow their

saturated - market expansion customers
- slow growth - investment internationally
- competitive pressure opportunities - extending PLC
- excess capacity - benefits of
- compete successfully internationalization
- policies to promote - search for resources
foreign
 GROWTH RATE
PRODUCT UNIQUENESS
SCALE EFFECTS

MARKETING
INTERNATIONAL MARKET
OPPORTUNITIES
PROFIT

DISTRIBUTED RISK
REDUCE R&D COSTS
ACCESS TO INPUT
SOURCES
 Requitements for implementing IM
• Must maintain the market share and its position within the domestic
market

• Build global awareness

- Cultural immersion
- Knowledge of different cultures, histories, global market potential &
economy, social and political trends

• IM orientation
IM task
Marketing Decision Factors
Controllable elements Uncontrollable elements
- Marketing mix - Domestic environment
- Firm characteristics (Political/legal forces, Economic climate,
- Research Competitive structure)
- Foreign environment
(7 factors)
The Self-Reference Criterion & Ethnocentrism
• The SRC is an unconscious reference to one’s own cultural values,
experiences, and knowledge as a basis for decisions.

• Closely connected is ethnocentrism, that is, the notion that people

in one’s own company, culture, or country know best how to do
things.
 Analytical Framework to avoid errors in business
decisions
• Define the business problem or goal in home-country cultural traits,
habits, or norms.
• Define the business problem or goal in foreign-country cultural traits,
habits, or norms through consultation with natives of the target country.
Make no value judgments.
• Isolate the SRC influence in the problem and examine it carefully to see
how it complicates the problem.
• Redefine the problem without the SRC influence and solve for the
optimum business goal situation.
Stages of IM Involvement
No Direct Infrequent Regular Foreign International Global
Foreign Foreign Marketing Marketing Marketing
Marketing Marketing
Do not Temporary Firm has - Fully committed - Treat the world
actively surpluses permanent to IM activities as on market
cultivate caused by productive - Seek markets all - market segments
customers variations in capacity devoted over the world and are defined by
outside production to the sell products for income levels,
national levels or production of markets in various usage patterns, or
boundaries demand goods and countries other factors that
overseas services to be frequently span
marketed in countries and
foreign markets regions
2. The differences between domestic
marketing & IM
Basis for comparison Domestic marketing International marketing
Business operation In a single country More than one country
Nature of customers Almost same Variation in customer tastes and
preferences.
Area served Small Large
Government Less Comparatively high
interference
Risk factor Low Very high
Capital requirement Less Huge
Use of technology Limited Sharing and use of latest technology.
Research Required but not to a Deep research of the market is required
very high level. because of less knowledge about the foreign
markets.
Comparison of Single-Country Marketing
Strategy & Global Marketing Strategy
Single-Country Marketing strategy Global Marketing Strategy

Target market strategy Global market participation

MM development MM development
- Product - Product (adaptation or standardization)
- Price - Price (adaptation or standardization)
- Place - Place (adaptation or standardization)
- Promotion - Promotion (adaptation or standardization)
Concentration of marketing activities
Coordination of marketing activities
Integration of competitive moves
3. The Orientation of IM
(Keegan & Green 2007, adapted from Permlutter 1969)
Ethnocentric Polycentric Regiocentric Geocentric
orientation orientation orientation orientation

- do not adapt their - equal importance to - economic, cultural or - to target “global

products to the needs every country’s domestic political similarities consumers” who have
and wants of other market among regions similar tastes
countries where they - believe in uniqueness of - to borrow from every
have operations every market country what is best
4. IM process
Market &
Select target Product/servic
potential Develop Implement &
markets & e planning and
market marketing mix evaluate MM
entry modes development
analysis
 ?
1. From a marketing perspective consider the evidence for and against
the idea that we are moving towards a global world.

2. Bring current international stories relating to organisations, countries

or people